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Gleeson: The funds that should be on your radar

FE’s head of research highlights some of the lesser-known funds that have caught the attention of his team so far in 2013.

By Joshua Ausden, News Editor, FE Trustnet Follow
Monday March 04, 2013


FE’s Rob Gleeson (pictured) believes investors are missing out on major diversification benefits by not looking beyond the elite group of high-profile funds that dominate the sales charts.

ALT_TAG He highlights four funds that have recently caught the attention of the FE Research team, which are all less than £300m in size:


Jupiter India

Gleeson believes a severe lack of quality emerging markets funds means investors need to consider more specialist portfolios – such as the £257m Jupiter India fund.

"A lot of the biggest emerging market funds are closed or closing, and so you have to look further afield for exposure," he said.

"Rather than investing in a lesser emerging markets fund, investors might want to consider more specialist, regional funds."

"We currently like the team behind Jupiter India."

The fund has been headed up by Avinash Vazirani since its launch in February 2008.

According to FE data, the four crown-rated portfolio has returned 36.29 per cent over this period, beating its MSCI India benchmark by 30.83 percentage points.

Performance of fund vs index since launch

ALT_TAG

Source: FE Analytics

Jupiter India has also been significantly less volatile, with an annualised score of 28.32 per cent over five years, compared with 33.54 per cent from the index.

Of the 13 other India funds in the IMA Specialist sector, only First State Indian Subcontinent – which is soft-closed – and Aberdeen Global Indian Equity have returned more.

Financials is currently Vazirani’s biggest sector position, although at 31 per cent of the fund it is actually underweight versus the MSCI India index.

The £257m fund requires a minimum investment of £500 and has a total expense ratio (TER) of 1.88 per cent.


IFDS IM Argonaut European Alpha

Gleeson rates FE Alpha Manager Barry Norris highly and points to his IFDS IM Argonaut European Alpha fund as a good alternative play in the IMA Europe ex UK sector.

"This was a popular fund when it was run by Ignis, but things have gone a little bit quiet since then, perhaps because of the name change," said Gleeson. "However, we think it is as good as it ever was."


"The manager is compelling, viewing stocks in a very different way to others. He splits stocks into growth and value, but puts some in different places than a lot of his competitors would."

"We like a range of styles and so it’s good to have something different," he added.

Performance of fund vs sector and benchmark since launch

ALT_TAG

Source: FE Analytics

According to FE data, IFDS IM Argonaut European Alpha is the fifth-best performing fund in its sector since its launch in May 2005, with returns of 134.84 per cent.

It has almost doubled the returns of its MSCI Europe ex UK benchmark over this period, with less volatility.

Norris has also significantly beaten both the sector and index over three and five years.

The five crown-rated portfolio is highly concentrated, with almost one-third of its assets invested in the top-five companies.

Norris’ favoured sector at present is consumer goods, which has a weighting of 37 per cent. Nestle, Roche and Volkswagen are among his largest holdings.

The fund requires a minimum investment of £500, and has a TER of 1.79 per cent and assets under management (AUM) of £219m.


Invesco Perpetual UK Aggressive

This is one of the lesser-known equity funds run by Invesco Perpetual, but Gleeson doubts whether this will be the case for much longer.

"The fund is a highly concentrated, best-ideas portfolio, which has had a very strong run of late," he said.

In the second half of 2011, manager Martin Walker ditched his defensive bias in favour of cyclicals, including financials and UK domestic plays such as Thomas Cook and Dixons.

He was the first Invesco Perpetual manager to make the move. The funds of Neil Woodford and Mark Barnett are still packed full of pharmaceuticals and tobacco.

This has worked out well for the manager: according to FE data, Invesco Perpetual UK Aggressive was a top-decile performer in the UK All Companies sector last year, with returns of 29.94 per cent.

This surge in performance has helped push the fund into the top quartile of its sector over three, five and 10 years.


Performance of fund vs sector and index

Name 1yr returns (%)
3yr returns (%) 5yr returns (%) 10yr returns (%)
Invesco Perp - UK Aggressive 27.54 40.82 52.5 314.33
FTSE All Share 13.26 34.5 34.17 170.52
IMA UK All Companies 13.92 36.39 30.24 160.58

Source: FE Analytics

It has easily outperformed its FTSE All Share benchmark over the four time periods too, although it has been more volatile.

Walker has headed up the fund since July 2001. It requires a minimum investment of £500 and has a TER of 1.7 per cent.


CF JM Finn Global Opportunities

This is the smallest and perhaps the least known of those on Gleeson’s radar at the moment.

"I really rate this one," he said. "We like the manager very much."

"He has a lot of risky strategies in the portfolio, but if you can stomach the volatility it will do very well."

"If the next 20 years is anything like the last, it will do very, very well," he added.

The £82.5m portfolio is one of the most volatile in its IMA Global sector, with an annualised score of 22.22 per cent over five years.

However, the fund has compensated for this with very strong performance in the long-term. Since its launch in January 2004, FE Alpha Manager Anthony Eaton has returned 160.28 per cent, almost doubling the returns of the IMA Global sector average, which is also the fund’s benchmark.

The fund has a decent yield as well, at 2.07 per cent.

Eaton has a stellar record in rising markets, but as Gleeson suggests, this fund is certainly not for the faint-hearted. In 2008, he lost 47.32 per cent – more than 23 percentage points more than the sector.

The fund has a small to mid cap focus and is overweight commodities.

However, the risks associated with these markets are offset by a high level of diversification; FE Analytics data shows the manager only has more than 2 per cent in three of the 100-plus companies he owns.

CF JM Finn Global Opportunities requires a minimum investment of £1,000 and has a TER of 1.66 per cent. It has five FE Crowns.



 
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IBJ Mar 07th, 2013 at 07:07 PM

The Jupiter India does n't look that good to me. Its growth above index was in late 2009 and it appears to have just tracked the index since. Not impressed.

Reply
SF Mar 04th, 2013 at 02:20 PM

Looking at Jupiter India - I cannot see a good reason for picking this fund, unless the team has changed recently.

It made its gain in the period up to March 20101 - over the last 3 years it has ended up at a loss. Looking more closely, it seems to close out each March at about the value from the previous March.

Reply
dlp6666 Mar 04th, 2013 at 12:03 PM

If "in 2008, he lost 47.32 per cent – more than 23 percentage points more than the sector" and given a hefty c.12% rise in just the last three months, just now looks expensive and would probably NOT be the best time to invest in the JM Finn fund (which could suffer disproportionately on any correction).

Reply
Disgusted Mar 04th, 2013 at 11:26 AM

Gleesons' recommendations obviously reflect a bullish outlook. What funds should be on your radar really depends where on the bull/bear spectrum you find yourself right now. I think recommending funds for a bearish outlook is more difficult as funds are designed to make money in a rising market and lose it in a falling one.

Reply
Thomas McMahon Mar 04th, 2013 at 11:31 AM

@ Disgusted

We have looked at some defensive funds a couple of times in the last month or so. You might find these articles interesting:

http://www.trustnet.com/News/404214/five-trusts-to-defend-against-a-market-correction/

http://www.trustnet.com/News/404296/five-funds-to-help-you-sleep-at-night/

Reply
 

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