Rathbones Global Opps “the standout fund in its sector”, say experts
Investors are increasingly turning to global portfolios to diversify away from the UK, but there are few with an established track record.
The high level of consistency and strong investment process of the Rathbones Global Opportunities
funds sets it above the rest in the IMA Global sector, according to industry experts.
The £180.9m portfolio, headed up by FE Alpha Manager James Thomson
(pictured), is a top quartile performer over a three, five and 10 year period, and has outperformed its peer group in eight of the last nine years. The fund’s consistency has resulted in it being included in the FE Select 100
, which identifies the top-rated portfolios in their respective asset classes.
Performance of fund versus sector and index over 10yrs
Source: FE Analytics
However, track record aside, FE Research’s Charles Younes says it's the manager’s investment process that makes the fund so interesting.
“He knows what he's good at, and what he isn’t good at,” he said. “Before 2008, he had some large losses so he changed the direction of the fund so that it was more defensively minded.”
“He now avoids cyclicals such as financials and mining, and also avoids direct exposure to emerging markets, which he views as too risky. Instead, he runs a portfolio of high conviction stocks with a concentrated number of holdings. He also likes to hold the companies he invests in for a long term so the turnover is very low.”
Thomson has been sole manager of the portfolio since 2005, but has been involved in the day-to-day running of the fund since its launch in 2001.
In 2008, Rathbone Global Opps lost 39.39 per cent – more than twice as much as its FTSE World benchmark, and 15 percentage points more than its sector average.
However, Thomson’s new investment process has resulted in a much lower annualised volatility, illustrated by its strong showing in the down market of 2011.
Year-on-year performance of fund versus sector and index
Source: FE Analytics
|| 2012 (%)
|| 2010 (%)
|| 2009 (%)
|| 2008 (%)
| Rathbones Global Opps
| IMA Global
| FTSE World
Andy Parsons, head of investment research at The Share Centre, agrees that Thomson’s way of running portfolios makes him the man to beat in the sector.
“The fund stands out from others in this arena due to the manager’s strong investment approach,” said Parsons. “The flexible unconstrained investment mandate allows him to back companies he feels are strong with good growth potential, regardless of the macroeconomic environment.”
“For example, Thomson avoids sectors such as banks and mining, because both are affected by the economic cycle and factors outside of their control.”
“Investors should appreciate that he is not a value investor and will be prepared to pay a premium in order to own a company where he has clearly identified a catalyst for the share price to move,” he finished.
Tim Cockerill, head of collective research at Rowan Dartington, believes that the Rathbone fund is a very good option for investors looking for global diversification. However, while Thomson has cut back the fund’s volatility, he says investors should remain wary of his high conviction approach.
“I like a lot of what Rathbones does, because of its funds; high conviction way of doing things is ideal for long term investors,” he said. “The Rathbones Global Opps is a best ideas fund with an interesting mix of investments.”
“Thomson has done a sound job over three years compared to its sector, but over six months it has been a bit more volatile. That’s always the risk you take with this kind of fund.”
Rathbones Global Opps is overweight the UK and Northern European, though the US still has the biggest regional weighting overall. It has just 3.94 per cent invested directly in emerging markets.
Among its biggest holdings are Rightmove, Petrofac and the Association of British Foods. Thomson currently has 16.5 per cent invested in cash, which reinforces his more defensive mindset.
The fund has a minimum investment £1,000 and a total expense ratio (TER) of 1.56 per cent.