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Tell me whats good 2

We’ve partnered with independent fund research house Square Mile to bring you a few suggestions of decent funds which all specialise in different areas and geographies.  As always, what’s happened in the past cannot be taken to mean that the same performance is a given in the future – there are no guarantees and no-one has a crystal ball.


Worldwide Share Funds

Standard Life Investments Global Smaller Companies

 

“Looking for future leaders”

 

This fund looks to invest in a collection of smaller sized firms from across the globe which it thinks will go up in value over time. The fund manager is trying to pick quality, growing companies that have the ability, or potential, to be future leaders in their fields. Getting a fund manager to do this for you could be viewed as a lower risk way to access what can be a potentially higher risk area of financial markets - as smaller businesses tend to be less established and the future less certain. Ultimately, Square Mile would expect the fund’s bias for high quality and growing firms to add value for investors over the long-term and help minimise losses when investor sentiment turns sour; though there will undoubtedly be times when it struggles for example, when its investment style falls out of favour, and bigger companies have their day in the sun.

 

 Cumulative Performance (28/02/2018)

 

5 Years

1 Year

Standard Life Investments Global Smaller Companies

116%

20%

MSCI ACWI Small Cap

85%

6%

 

Stewart Investors Worldwide Sustainability

“Sustainable global growth”

The investment strategy seeks to generate long-term growth through a portfolio of global shares. The team search the globe looking to invest in only the highest quality companies. These firms tend to be run by extremely capable management teams and have strong financial characteristics. Furthermore, the company itself has a long-held belief in the responsible stewardship of capital. In practice, this means that the integrity of those running the companies that they invest in must be of the highest order. This can be judged not only by their attitude to shareholders but also through their interaction with employees, suppliers, and customers alike, as well as the impact of their business activities on the local community and environment. Square Mile see the fund as an attractive choice for the long-term investor who is seeking a global portfolio of quality businesses that are ideally positioned to contribute to, and benefit from, sustainable global development.

 

Cumulative Performance (28/02/2018)

 

5 Years

1

Year

Stewart Investors Worldwide Sustainability

75%

7%

MSCI AC World

78%

7%

 

British Share Funds

 

Liontrust Special Situations

 

“Steady Eddy”

This fund is managed using a very well-considered and defined investment process that steers the managers towards steady businesses that are gradually growing and generating high levels of cash. The preference is for companies that have a clear competitive advantage. The team consistently operates with a disciplined adherence to their investment process and are fully prepared to sell those companies that lose their advantage or fail to translate it into superior returns. This discipline means that there is a low turnover of shares in the portfolio.  

 

Whilst this is not designed as an income paying strategy per se, the companies within the portfolio tend to generate a high level of dividend growth over time as shareholders participate in the companies' success. Often these types of businesses are not seen as being the most dynamic of firms but they do tend to steadily generate attractive returns. It is important to note that the fund tends to avoid companies in certain parts of the market, for example those associated with mining, and utilities. Therefore, the fund could underperform the broader FTSE All Share index if these types of companies perform well.

 

Cumulative Performance (28/02/2018)

 

5 Years

1

Year

Liontrust Special Situations

67%

8%

FTSE All Share

42%

4%

 

 

Threadneedle UK

“Blue chip Brits”

The bulk of this fund tends to be invested in well run blue chip UK companies that have strong franchises, barriers that deter potential competitors and are profitable. These types of companies should prove reliable and attractive holdings for investors over the longer term. These positions are supplemented by holdings that can gyrate in and out of fashion depending on the strength or weakness of the broader economy.

 

It is run by Chris Kinder, who is a conviction led manager who forms his investment views with a deep level of research. He’s not afraid to go against the herd. To assist with this he makes good use of (Columbia) Threadneedle's sizeable UK equities team. The team stick to a well-defined research process and boast an impressive array of experienced investors. Mr Kinder is a thoughtful and frank person and is plainly driven to continue the success of this strategy.

 

Given this fund's clear investment philosophy and process, the support network behind Mr Kinder, his investment experience and passion to succeed, Square Mile consider this an excellent strategy to gain exposure to the larger end of the UK market.

 

 

Cumulative Performance (28/02/2018)

 

5 Years

1

Year

Threadneedle UK

50%

4%

FTSE All Share

42%

4%

 

 

Income

Unicorn Income

“Mid-sized income”

With Simon Moon and Fraser Mackersie at the helm, this fund is run by a pair of managers who appear to have formed a strong working relationship with an acute focus on the needs of their investors. Their process has been designed to highlight higher quality companies that are committed to paying and delivering sustainable dividends.

 

The fund has a natural bias to small and medium sized companies and as a result it can and does look very different from a large number of competitor strategies - many of which invest in large, blue chip companies, especially from an income perspective. It should be noted therefore, that the fund's performance is likely to be far more aligned to the smaller cap portion of the UK market. This could result in a more volatile return profile, particularly when viewed against the FTSE All Share, for example. However, the attributes sought in the companies held should provide some defensive characteristics during more troubled periods. The managers are also aware of the risks of investing in this specialist asset class and construct the portfolio with a sensible balance of conviction and providing adequate diversification.

 

Overall, Square Mile feel this strategy should appeal to investors who are keen to diversify their UK equity income streams away from the market's more significant distributors, but are prepared to accept some additional volatility over shorter time frames.

 

Cumulative Performance (28/02/2018)

 

5 Years

1

Year

Unicorn Income

66%

12%

FTSE All Share

42%

4%

Jupiter Distribution

“A smoother path”

Square Mile believe this fund may have some appeal for the more risk averse investor. Indeed, the experienced managers are very aware of the investor base and consider risk as the permanent loss of capital.

 

This fund has two core chunks – one made up of shares and one made up of bonds. These are blended and balanced to produce the final outcome.  The bond part of the fund invests in the debt of reliable businesses which have sensible longer-term strategies and where the manager feels comfortable holding each issue until its maturity. On the shares side, the emphasis is on higher quality dividend paying companies.

 

Whilst the fund may appear less diversified than other multi asset offerings (which may have a broader mix of investments), Square Mile feel the collegiate approach of the managers and the understanding of the investor base are a compelling combination for a fund such as this.

 

Cumulative Performance (28/02/2018)

 

5 Years

1

Year

Jupiter Distribution

27%

1%

IA Mixed Investment 0-35% Shares

20%

2%

 

 

Specialist/’funky’

Polar Capital Technology

The Polar Capital Global Technology fund is managed by experienced investors who are skilled in identifying changing industry trends and the companies that are poised to benefit as a result. Technology is constantly evolving and continued vigilance is required by the managers and their supporting team to keep informed of developments. The fund benefits from the experience of its managers, who have witnessed first-hand a plethora of seemingly promising businesses that have fallen by the wayside as well as the gains that can be generated through companies that have been successful. Square Mile believe this is an attractive fund for long term investors who are looking for exposure to rapidly growing technology companies. It should be noted that the managers have a long investment horizon and this is reflected in the fund’s objective which is to outperform the Dow Jones World Technology index over a period of five to seven years. Therefore, this fund should only considered by investors who are prepared to hold this strategy for a least this timeframe.

 

The fund's annual charge may seem higher than most equity funds but it is common for more specialist strategies to be priced more aggressively. The fund has a performance fee in addition to the annual management charge, the managers receive a 10% share of any performance that is ahead of the fund's benchmark. In principle, Square Mile are not against such fees since they arguably greater align the managers interests with those of the fund's investors. This will increase costs for investors, but Square Mile think it is a price worth paying for a strategy such as this.

 

Cumulative Performance (28/02/2018)

 

5 Years

1

Year

Polar Capital Global Technology

92%

21%

Dow Jones World Technology

74%

413%

 

 

 

 

 

Bonds or Fixed Income

JPM Unconstrained Bond

“Cautious pick ‘n’ mix”

This is a solid bond fund that can invest across a range of fixed income securities, run by an experienced team of investors. The investment process is thorough and well applied, with a strong focus on risk at both the individual security and portfolio level and should result in a diversified portfolio with varied sources of returns. The fund is very much managed with a defensive mindset and therefore chunky losses and turbulence should be limited. Historically this has indeed been the case, and other than some minor volatility, the fund’s return profile has been remarkably smooth.

 

Square Mile believe this fund is likely to be suitable for investors who wish to gain exposure to fixed income markets in a risk-controlled manner, with a strong focus on capital protection.

 

Cumulative Performance (28/02/2018)

 

5 Years

1

Year

JPM Unconstrained Bond

11%

2%

ICE Overnight GBP LIBOR

2%

0.3%

Past performance is not a guide to future returns.

 

Henderson Preference & Bond

“Income generating”

The managers of this fund are experienced investors who work very well as a team and have proven themselves adept at managing macroeconomic, market and security specific risks over a range of market conditions.

 

The strategy has a specific focus on income, with the managers seeking to achieve a level of income which is high but, at the same time, consistent with the preservation of investors' capital.

The fund tends to have a bias to corporate bonds in order to meet its income objective and is therefore likely to perform strongly when these markets are rising. However, this can be at the expense of more variable performance in falling markets. Overall, Square Mile believe this fund may be suitable for investors seeking a high but sustainable level of income, with a focus on capital preservation over the course of a market cycle, but who are prepared to accept a some degree of volatility, particularly over the shorter time frames.

 

Cumulative Performance (28/02/2018)

 

5 Years

1

Year

Henderson Preference & Bond

28%

4%

IA Sterling Strategic Bond

21%

3%

 

 

Notes:

 

  1. These are independent views produced by Square Mile
  2. We’re not regulated to give personalised investment advice and we don’t know your circumstances – investing may not be right for you
  3. There is no guarantee that these funds will go up – they are long-term investment options and will go up and down in value in response to economic events and business cycles

 

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