Earlier this week, we highlighted eight IMA All Companies funds that have outperformed their peer group average in most of the past 10 calendar years without having sky-high fees.
However, investors want more than just domestic names, with global funds being a common stop to get wider equity exposure.
Our analysis of the global sector has thrown up three funds that could be considered cheap consistent outperformers.
All three sit in the IMA Global sector’s first or second quartile in at least seven of the past 10 years and have a clean ongoing charges figure (OCF) of less than 0.90 per cent.
Rathbone Global Opportunities
FE Analytics shows the £424.8m Rathbone Global Opportunities fund has outperformed the sector average in eight of the past 10 years.
FE Alpha Manager James Thomson (pictured) has delivered annualised returns of 11.6 per cent over the past decade.
It achieved first quartile performance in 2004, 2005, 2007, 2009, 2010, 2011 and 2013.
However, the fund was fourth quartile in 2008 – when it dropped almost 40 per cent, prompting Thomson to re-appraise his investment strategy – and is fourth quartile over the year to date.
Performance of fund vs sector over 10yrs
Source: FE Analytics
Rathbone Global Opportunities is a member of the FE Research Select 100 list of recommended funds, winning its place because of the “outstanding” performance since Thomson assumed sole control of the portfolio in 2005.
The FE Research team said: “With the exception of 2008, the fund has consistently generated higher returns for investors when compared with its benchmark and peers. During the financial crisis, the fund was too dependent on broader economic conditions and it experienced heavy losses when much of the world entered recession.”
“As a consequence of this, Thomson decided to adopt a more conservative approach, investing 20 per cent of his portfolio in stocks that are less economically sensitive. Since then the fund has been more balanced, which helped drive its solid performance during the turmoil of 2011.”
Rathbone Global Opportunities, which has a clean OCF of 0.80 per cent, currently has 61.30 per cent of its portfolio in the US, 14.22 per cent in Europe, 12.97 per cent in the UK and 3.77 per cent in Asia-Pacific.
The manager recently told FE Trustnet that he expects developed markets to outperform emerging markets over the long-term.
Baillie Gifford International
The £420m Baillie Gifford International fund is the cheapest consistent outperformer identified by our research, with an OCF of 0.69 per cent and seven years of beating the peer group.
FE Alpha Manager Charles Plowden, along with co-managers Malcolm MacColl and Spencer Adair, has steered the fund to outperform the peer group average in 2005, 2007, 2008, 2009, 2010, 2011 and 2013.
It was second quartile in all these years aside from its first quartile years of 2005 and 2009.
It has also had a strong 2014 to date with returns of 2.28 per cent putting it in IMA Global’s first quartile.
The average fund in the sector has returned just 0.24 per cent during 2014.
Baillie Gifford International could be an option for investors already happy with their UK exposure, as the fund invests in global equities excluding British stocks.
Its largest geographic exposure is to North America at 49.60 per cent, FE Analytics shows, followed by Europe at 22.10 per cent, emerging markets at 16 per cent and Asia-Pacific at 10.10 per cent.
The fund aims to find a significant number of opportunities away from its MSCI World ex UK benchmark, targeting an active share of around 90 per cent.
Investments are identified using a bottom-up approach rather than macroeconomic analysis, while the fund’s process revolves around the belief that the market tends to undervalues sustainable earnings growth.
Performance of fund vs sector over 10yrs
Source: FE Analytics
Investec Global Free Enterprise
Mark Breedon’s £474.6m Investec Global Free Enterprise could be another good option for investors with a decent UK allocation, as it has just 1.5 per cent in domestic stocks.
Its largest geographical allocation is to the US, at 53.8 per cent, with 19.8 per cent in Europe and 11.2 per cent in emerging markets.
The four crown-rated fund has ongoing charges of 0.87 per cent and has outperformed in seven of the past 10 calendar years.
It was first quartile in 2004, 2005, 2012 and 2013 as well as making top quartile gains over 2014 to date with a return of 4.80 per cent.
Investec Global Free Enterprise’s investment approach is based around the belief that high quality, attractively valued stocks with improving operating performance and increasing investor attention are likely to realise superior returns.
It makes use of Investec's proprietary quantitative screening process, which is followed up with quantitative analysis.
Performance of fund vs sector over 10yrs
Source: FE Analytics
The fund is currently in the first quartile of the IMA Global sector over one, three and five years and has outperformed the average fund in the sector by more than 35 percentage points over 10 years with a 149.84 per cent gain.
