Head of FE Research Rob Gleeson and his team removed the fund after manager Graham French’s departure last year, but say that following a meeting with the new manager Randeep Somel, they are satisfied the fund is in safe hands.
Gleeson (pictured) says that although the fund has had a patch of poor performance, its style is likely to see it outperform significantly when the world economy improves.
“M&G Global Basics is relatively specialist among global equity funds, focusing as it does on the building blocks of the world economy,” Gleeson said.“This makes it useful in providing added diversification during portfolio construction and means it should benefit if there is a sustained economic recovery.”
The £3.315bn fund was bottom quartile in the IMA Global sector in 2011, 2012 and 2013, hit hard by its exposure to the mining sector in particular.
Over the past three years it has lost 6.46 per cent as the IMA Global sector has made 22.21 per cent.
Performance of fund vs sector over 3yrs
Source: FE Analytics
In total 11 new funds have been added to the shortlist, while six others have had their rating moved up to a buy from a hold.
Fidelity Emerging Markets is one of the notable new entrants.
FE Alpha Manager Nick Price’s fund has recently been awarded a five crown-rating after it performed extremely well in a tough year for its sector.
FE Trustnet reported last month that Price’s portfolio had lost less than any other in the IMA Global Emerging Markets sector since the 2013 market correction – just 11.32 per cent.
The fund is up 1.65 per cent over three years, making it one of only a handful of funds to have made money over that period.
Performance of fund vs sector over 3yrs
Source: FE Analytics
Another new entrant to the list is the £306m Neptune Japan Opportunities fund run by FE Alpha Manager Chris Taylor.
“This fund was one of the more successful funds in riding the rally created over the last 18 months by Abenomics,” Gleeson said.
“Although one of the more volatile funds, it has become popular among the AFI panel of leading financial advisers and would be suitable for anyone looking for aggressive exposure to Japan.”
Our data shows that the fund has raced ahead over the past 18 months after having been a sluggish performer for a long time.
Performance of fund vs sector and index over 3yrs
Source: FE Analytics
It is up 26.04 per cent over one year to the 4.09 per cent of the sector.
A new entry in the bond sector is the £163m Aviva Investors Strategic Bond fund, managed by Chris Higham.
“Strategic bonds are becoming increasingly popular with investors and advisers due to their more flexible mandate, which is considered invaluable following the bond rally of the past few years,” Gleeson said.
“As one of the stronger performers in its sector, Aviva Investors Strategic Bond is an important addition to our buy-list.”
Gleeson’s own attitude towards bonds is wary. As part of the rebalancing process, the FE Research team has reduced the allocation to corporate bonds on a number of its model portfolios, but increased its weighting to gilts.
The FE Select Portfolios are risk-targeted funds, each of which has beaten its benchmark since launch in September 2008.
The following funds were awarded a buy-rating for the first time or upgraded from hold to buy.
Source: FE Analytics
Among those upgraded from hold to buy were HSBC Open Global Property, which has seen better performance relative to its peers over the past six months.
Invesco Perpetual UK Aggressive has also returned to form and been included, while Ciaran Mallon’s Invesco Perpetual Income & Growth was also upgraded.
Trojan Income has also made it back onto the list, as has CF Ruffer Equity & General.
“We have upgraded this fund's rating from hold to buy following an excellent period of performance over the last 12 months, which has seen it return top decile performance in its sector over one and three years,” Gleeson said.
