Mario Draghi’s bond-buying programme saw significant gains across global markets yesterday, confirming a strong run for equities going back to June this year.
While macro headwinds remain, improving conditions in the eurozone combined with better-than-expected economic data has seen a number of managers increase their exposure to risk assets in recent weeks.
Here is a selection for those who are optimistic and want to fully participate in a potential rally:
Rob Morgan, fund analyst at Hargreaves Lansdown, says the proven track record of Richard Pease and his focus on European equities makes him a particularly attractive option for a bullish investor.
"He doesn’t invest in peripheral nations like Italy or Spain, but does have a number of exciting European companies who have had strong returns," commented Morgan.
"He sticks to companies he knows inside out, most of which are niche and have performed well."
"All in all he is a very experienced manager who sticks to what he knows," he added.
Performance of manager vs peer group over 10-yrs
Source: FE Analytics
Pease, an FE Alpha Manager, has returned 182.92 per cent over the last decade, compared with 110.75 per cent from his peer group composite.
Although he has consistently returned more than his peers in up markets, his performance has also been less volatile, allowing him to protect effectively against the downside.
Morgan also appreciates Pease’s long-term investment style, which means his funds have a low turnover.
"He doesn’t do a lot of trading – when he buys a company he tends to hold it for a long period of time until he feels the value isn’t there anymore."
"He is certainly eye-catching for investors looking for a long-term investment strategy."
Pease has managed the five crown-rated Henderson European Growth
fund since its launch in July 2001.
The £828m portfolio is a top-quartile performer over three, five and 10 years. It has a minimum investment of £1,000 and a total expense ratio (TER) of 1.76 per cent.
Pease also runs the £402m Henderson European Special Situations portfolio, which will achieve a three-year track record next year. It has a minimum investment of £1,000 and a TER of 1.75 per cent.
"One manager that definitely stands out is Derek Stuart, who manages the Artemis UK Special Situations
fund," said Kerry Nelson, managing director of Nexus IFA.
"He gets on with his own investment decisions and always sticks to his guns. He doesn’t get fazed by the politics and wider macro situations, and so hasn’t panicked like some other managers."
Stuart’s £975.2m UK Special Situations fund, which he co-manages with Ruth Keattch, has delivered 290.03 per cent since its launch in March 2000 – significantly more than both its sector average and FTSE All Share benchmark.
It had a particularly good run during the up markets of 2003, 2004 and 2006.
Performance of fund vs sector and index since launch
Source: FE Analytics
It has a TER of 1.57 per cent and a minimum investment of £1,000.
Nelson also points to Schroders’ Richard Buxton, who recently told FE Trustnet
that he has become more optimistic about the outlook for UK equities.
"The common denominator amongst successful managers like Stuart and Richard Buxton is that they are good stock pickers, who are not concerned with political dynamics and just concentrate on the companies they hold," said Nelson.
"This allows them to add more value over the long-term. When or if the markets take off, someone like Buxton is the sort of manager you want."
Buxton's £2.8bn Schroder UK Alpha Plus
fund has returned 174.24 per cent over the last decade.
The portfolio tends to underperform during down markets, but this has been more than compensated for in the long-term by Buxton’s stellar record in up periods.
While the fund lost 6 per cent more than the All Share in 2008, Buxton followed this up with returns of 50 per cent in 2009, compared with just 30 per cent from his benchmark.
The fund has a minimum investment of £1,000 and a TER of 1.66 per cent.
Patrick Connolly, head of communications at AWD Chase de Vere, thinks newcomer Alex Wright (pictured)
would be a good bet for a bullish investor.
"Fidelity UK Smaller Companies
is not a fund that we use, because our policy tends to avoid the small cap sector."
"However, there are certainly lots of good smaller companies managers out there, including Wright, who are likely to do better than their larger cap rivals if the market rallies."
FE Alpha Manager Wright, who has also recently taken over the Fidelity Special Values investment trust, is one of the best-performing managers of the last three years, delivering returns of 91.69 per cent.
This is thanks largely to his strong run during the QE-fuelled rally of 2009 and 2010.
His Fidelity UK Smaller Companies fund has a minimum investment of £1,000 and TER of 1.72 per cent. With just £56m assets under management (AUM), it is flexible enough to invest across the small call spectrum.
Richard Hancock, analyst at the Financial Management Bureau, opted for another small cap-focused FE Alpha Manager – in this case, Investec’s Philip Rodrigs.
"He certainly outperforms in rising markets, but he’s also held his own during falling markets, which is a big bonus even if you are bullish," Hancock said.
"He is very much an Alpha generator, and doesn’t just rely on Beta. His risk-adjusted return figures – both information and Sharpe ratios – are extremely strong."
Since taking over the Investec UK Smaller Companies
fund in June 2006, he has returned 88.04 per cent, compared with 32.36 per cent from the IMA UK Smaller Companies sector.
Rodrigs had a particularly strong run in 2009 and 2010, although he also lost slightly less than his peers in 2008.
A recent FE Trustnet study
revealed that Rodrigs has the best risk-adjusted return record of all the UK small cap managers over a five-year period, beating industry stalwarts Harry Nimmo and Giles Hargreave to the accolade.
The four crown-rated portfolio has a TER of 1.6 per cent and is available for a minimum investment of £1,000. It has £408m AUM.