Investments  

Up-and-coming funds that deserve your attention

Up-and-coming funds that deserve your attention

Morningstar has revealed a list of the 22 mandates it believes are up and coming funds that deserve investors' attention.

The list contains both open and closed ended funds, all of which are actively managed, and include equity, bonds and alternative asset classes.

The list was updated as part of its semi-annual EMEA & Asia Prospects report, which highlights promising actively-managed investment strategies that Morningstar's manager research analysts don’t formally cover but believe merit broader attention.

The funds added include Jupiter's Global Emerging Markets fund, Investec's Global Special Situations fund, and Fidelity's Japan Smaller Companies fund.

Brian Dennehy, managing director at Dennehy Weller and Fundexpert.co.uk, saw potential in the biotech funds listed.

He said: "From the list provided below, the first fund that stands out is Polar Capital Biotech. This is a sector that we have emphasised recently as having significant potential because of the rapidly emerging breakthroughs in a range of treatments, such as stem cell treatment and immunotherapy.

"AXA Framlington Biotech is the older biotech fund and a viable alternative to Polar Capital Biotechnology. Both the Polar and AXA funds have had momentum recently. As a focussed, higher-risk strategy we like the AXA fund because of its history and focus on the smaller-cap end of the spectrum of biotech stocks."

But he said there has been too much fund recommendation by proclamation, "with little or no substance".

He said: "To know if a fund has potential you must have two things: objective criteria & evidence that this criteria applied today generates better than average growth in the future. Everything else is wallpaper and should be ignored."

Commenting on the inclusion of the Polar Capital Biotechnology fund, Darius McDermott, managing director at Chelsea Financial Services said: "In our view, this really is a best-in-class fund. In fact, we think it's the best biotechnology fund available due to manager David Pinniger's stock-picking skills.

"David and his team are highly knowledgeable and, since the fund was launched, they have proven adept at identifying the businesses which could succeed or which may fail, in a sector full of binary outcomes."

Ben Yearsley, director at Shore Capital, has just added the Jupiter Emerging Markets fund into his portfolios.

He said: "For a long time Jupiter was regarded as a predominantly UK and European investment house but over the last decade they have been building up global expertise.

"One of the key hires has been Ross Teverson, head of EM equities at Jupiter. Ex Standard Life, he is lesser known than many others in the space but I think he has an excellent product.

"The fund focuses on what he calls 'change investing' and looking for companies with positive catalysts for change. This multi cap fund also has frontier exposure."

The other fund he highlighted was the Investec Global Special Situations fund.

Value is often a dirty word in investment and admittedly there are good and bad times to hold value; with valuations cheap now could be one of them. This fund looks in all the obvious buckets, fallen angels, quality cyclical, special sits and deep value to give a few examples. The team is lead by the excellent Alastair Mundy.”