The tax year ends in April, meaning that investors have roughly three months to use up their allocation for the year and benefit from the tax breaks on offer.
The manager of each fund has won an FE Alpha Manager ranking, meaning that their record is among the top 10 per cent of their peers in terms of risk-adjusted alpha, consistency of outperformance and results in up and down markets.
Emerging markets rebound
Gleeson (pictured) said: “After developed markets surged ahead last year, the disparity in price/earnings ratios between emerging and developed markets is near its widest in three years.”
“For investors seeing this as a good entry point, Mark Asquith, lead manager of the Somerset Emerging Markets Small Cap fund, is one to watch.” “Small caps are more exposed to domestic consumption, whereas many emerging market large caps are export-dependent.”
“Therefore, if emerging market growth and consumption pick up this year, his fund, which is top quartile over one and three years and has a five crown-rating, stands to do well.”
Data from FE Analytics shows that the fund has delivered positive returns over the past three years while its sector and benchmark have both lost over 10 per cent.
Performance of fund vs sector and benchmark over 3yrs
Source: FE Analytics
The £60m fund has ongoing charges of 1.67 per cent and is available through various platforms.
European recovery
Charles Younes (pictured), analyst at FE, said: “For investors who believe Europe has reached its nadir and the only way is up, Henderson Global Investors’ John Bennett provides an interesting approach to growth investing.”
“John has over 25 years of experience and is a strong believer in the business cycle. He is lead manager of the Henderson European Selected Opportunities fund, where alongside deputy manager Asim Rahman, he takes conviction and often contrarian bets, depending on where he sees industry growth phases appearing.” “Given the fund’s impressive three-year return of 41.31 per cent (to 16 January 2014) and top-quartile ranking among its peers, it provides a good way to play a pending European recovery.”
The £1.6bn fund has four FE Crowns and ongoing charges of 1.77 per cent.
Abenomics in Japan
Analyst Amandine Thierree (pictured) said: “For those who can envisage Shinzo Abe’s radical actions bearing fruit, Stephen Harker who heads up the GLG Japan CoreAlpha fund is one to track.”
“GLG’s investment style incorporates both corporate fundamentals and market timing, which will be essential now that broad market valuations have rebounded.” “Together with deputy managers Neil Edwards and Jeff Atherton, Stephen follows the principles of mean valuation reversion, aiming to buy low and sell high.”
“This approach should help prevent the fund avoid price bubbles, and a return of 57.64 per cent over the last five years (to 16 January 2014) has ranked it in the top quartile of its peers.”
Performance of fund vs sector and benchmark over 5yrs
Source: FE Analytics
The £1.2bn fund has ongoing charges of 1.69 per cent.
US outperformance
Younes likes the GAM North American Growth fund, run by the massively experienced Gordon Grender, for US equity exposure.
“While US equities had a formidable 2013, with the S&P 500 returning 31.95 per cent, there is certainly scope for further strong performance should corporate earnings come through strongly in 2014,” Younes said.
“GAM’s Gordon Grender has a natural preference for quality companies, which should prevail as corporate fundamentals return to centre stage.”
“Gordon has managed the GAM North American Growth fund since 1985 and seeks to invest in small and mid cap companies that he feels are underappreciated and therefore undervalued.”
“The portfolio only consists of ideas he deems worthwhile so cash sometimes builds up, as is currently the case at more than 20 per cent.”
“However, this should not be a concern since in the small to mid cap arena being selective is imperative to maintaining performance.”
“The fund ranks in the top quartile of its peers over three and five years, despite having lower volatility.”
The £300m fund has ongoing charges of 1.64 per cent.
UK domestic recovery
Gleeson said: “Giles Hargreave is one of the most experienced fund managers, focusing on the UK’s domestic story with his expertise in small and micro caps.”
“The funds he manages have collectively returned three times that of his peer group since the start of the millennium.”
“His £720m Marlborough Special Situations fund has benefited from his aggressive style and ability to react quickly to changes in market conditions.”
The fund is a top-quartile performer over five- and 10-year periods, although more recently it has been closer to the sector average.
Performance of fund vs sector over 3yrs
Source: FE Analytics
Over three years it has returned 60.32 per cent while the average IMA UK Smaller Companies fund has made 55.29 per cent.
The fund has ongoing charges of 1.54 per cent.
For bond exposure
Thierree rates Richard Woolnough’s bond portfolios for investors looking for safety through diversification.
“Despite the allure of double-digit returns that equities have achieved recently, an investor should never forget the importance of diversification,” she said.
“Fixed income should provide just that, and one manager that stands out in particular is Richard Woolnough of M&G Investments.”
“Richard is lead manager of three bond funds – M&G Corporate Bond, Strategic Bond and Optimal Income – which have a combined £25bn of assets entrusted to him.”
“With the Optimal Income fund he has most freedom to express his macroeconomic views and take conviction bets, and he can also use derivatives to enhance performance.”
The £16.46bn M&G Optimal Income fund has 12.2 per cent in equities. It has ongoing charges of 1.41 per cent and is yielding just over 3 per cent.
To leave asset allocation to the professionals
Younes said: “For investors seeking a one-stop shop solution, Jupiter’s trio of John Chatfeild-Roberts, Peter Lawery and Algy Smith-Maxwell, who collectively run the Jupiter Merlin Growth, Income and Balanced Portfolios, may be of interest.”
“John is chief investment officer at Jupiter and responsible for heading macroeconomic-themed discussions, while Peter and Algy are more focused on fund selection at which they demonstrably excel.”
“Each of the above funds has beaten sector peers and returned at least 19 per cent over the last three years.”
“Jupiter’s extensive resources in the mixed asset space earned it an 'Outstanding' group award from FE.”
The Jupiter Merlin range is relatively expensive, with ongoing charges above 2 per cent.
