Emerging markets still have their problems, fixed income yields have risen and developed markets have been flatter after a bull-market lasting for most of the past five years. The effects of an end to QE and interest rate rise after years of historically low levels are at best uncertain.
However, for all the bearish sentiment there are plenty of bullish managers such as Old Mutual’s Richard Buxton who believes the UK is set for a 15 years of rising markets.
The uncertainty over where the global economy is in the business cycle makes a case for searching for those funds that can both make and protect money.
Here, Gary Potter – who manages the F&C’s Navigator range of multi-manager funds – picks his favourite funds to make money and protect capital in bull and bear markets.
“When you pick funds you want to hold them. You don't want to have to think you have to sell when markets inevitably fall, you want something that you can lean into and row through it,” he said.
BlackRock Asian Growth Leaders
This $48m fund, managed by Andrew Swan and Emily Dong was launched in November 2012.
Potter says he bought it four months after the launch and currently owns 50 per cent of the fund across the Navigator multi-manager range.
He says the fund has attractive bull and bear market characteristics making it suited to choppy markets.
Since it was launched, which was largely a torrid time for Asian equities; it has returned 28.33 per cent.
By comparison, the MSCI Asia ex Japan index – the fund’s benchmark – rose 9.06 per cent over this period.
Performance of fund since 1 Nov 2012
Source: FE Analytics
Blackrock Asian Growth Leaders is an offshore fund that has limited platform availability, although there is a share class with a $5,000 minimum investment.
Schroder UK Alpha Plus
Potter says he likes this £1.7bn fund for its manager, Philip Matthews’, rotational style of investing.
“Matthews at Schroder is very capable and his rotational style recognizes that there is no dogmatism. He just buys whatever are the most attractive stocks and at the right time,” he said.
Potter says he was a fan of the manager in his previous job at Jupiter and continues to back him since his move to Schroders.
Matthews took over the management of the fund in October 2013. Since then, a relatively short space of time, it has returned 5.23 per cent, slightly below the IMA UK All Companies sector average and the fund’s benchmark, the FTSE All Share.
Performance of fund, sector and benchmark since 16 Oct 2013
Source: FE Analytics
However, according to FE Analytics, the manager has outperformed his peer group composite over measures of one, three, five and seven years.
Hermes Asia ex Japan Equity
Potter also favours this recently launched fund for exposure to Asian equities
The $597m fund is managed by Jonathan Pines. Since its launch in November 2012 it has been the best performer of 84 funds in the IMA Asia Pacific ex Japan sector, returning 32.59 per cent.
Performance of fund, sector and benchmark since 1 Nov 2012
Source: FE Analytics
By comparison, the average return in the sector over this period was 9.07 per cent and the MSCI Asia Pacific ex Japan index rose 9.51 per cent over this period.
Blackrock Continental European Income
This £356m fund has been co-managed by Alice Gaskell and Andreas Zoellinger since its launch in May 2011.
Potter says he expects European equities to rise over the medium term and that he this to generate growth in income.
"The secular trend over the next five years will be that European equity income will become much more significant."
He says this fund whilst being an income producing fund also has a growth bias.
“The managers understand bull and bear market capture. As markets have gone up and gone down the fund has shown a unique combination of outperformance in both, which is rare.”
Since the fund was launched, which includes period of both up and down markets, the fund has maintained outperformance of its IMA Europe ex UK sector. Since its launch it has returned 42.61 per cent, the best return in its sector.
Performance of fund, sector and benchmark since 6 May 2011
Source: FE Analytics
By comparison, the average return in the sector was 21.89 per cent whilst the fund’s benchmark – the FTSE World Europe ex UK index – rose 18.84 per cent.
It was also the best performing fund in its sector over this period out of 96 funds.
Gaskell recently told FE Trustnet that European equities could be due a market correction in the wake of the European elections, presenting a buying opportunity.
