The Woodford Patient Capital Trust will invest in early-stage and early-growth companies with “outstanding intellectual property” and has an innovative fee structure. You can’t have missed the headlines on this and can read our analysis of the news here.
So that made for a busy Friday morning! But we’d been occupied through the rest of the week by breaking the news on Coram’s first portfolio and subjecting the asset management world to our usual research.
There’s a collection of our favourite stories of the week below. As always, have a great weekend.
Paul Warner: Major market correction just six weeks away
Minerva Fund Managers’ managing director Paul Warner expects a correction to hit the markets in the coming weeks and told us that he is keeping his ISA in cash so he can jump in when buying opportunities emerge.
He explained: “I am quite bullish for this year as a whole, in fact, but not on a shorter term basis. The ECB’s QE is overriding the Greek political negative and I suspect that over the coming six weeks or so that will reverse.”
“We will have a setback [in markets] coming up over this period. Its size will depend on the exact cause, but it could be similar in magnitude to December’s.”
Performance of index in Dec 2014
Source: FE Analytics
The funds James Sullivan and Martin Gray have been buying for their new portfolio
Investors taking a cautious view on the markets should take a look here, where FE Trustnet revealed the funds and stocks that James Sullivan and Martin Gray have been putting in their new Coram Global Balanced fund.
The portfolio is not yet fully invested, but Sullivan told us: “There is the temptation to implement the desired portfolio asset allocation as soon as we’re given money to run, but it’s important not to lose sight of the fact we are managing these funds over five- to seven-year investment cycles – so a week or two becomes rather insignificant.”
Some of the duo’s old favourites from their days at Miton can be found in the fund, such as weightings to Japanese equities and pockets of value within the UK market. And despite their overall cautious mindset, they have exposure to riskier areas such as emerging markets and mining stocks.
Source: FE Analytics
The bond funds that have given you the fewest sleepless nights
In this study, Alex Paget looked through the IA Sterling Strategic Bond sector to find the most consistent monthly performer of the past five years. FE Alpha Manager Ariel Bezalel's £2.5bn Jupiter Strategic Bond fund took the title.
Jupiter Strategic Bond has delivered a positive return in 50 of the 60 months. The average fund in the sector has achieved 43, while its benchmark – the iBoxx Sterling Non Gilts All Maturities index – has delivered just 41.
However, it must be borne in mind that the fund has seen some sizeable drawdowns over this time: for example in May 2010 it fell 3.7 per cent and in June 2014 it lost close to 3 per cent. The fund is still top quartile over five years.
Head over to the original story to see which other strategic bond funds have had more than 40 positive months out of the past 60.
Why you shouldn’t obsess over the latest investment buzzword
There’s been a lot of talk about active share over recent months, as this metric allows investors to determine how willing their fund manager is to look away from their benchmark for opportunities.
A number of groups – including Neptune Investment Management, Majedie and Threadneedle Investments – have pledged to make this easily available to their investors, which can only be a good development. Here at FE Trustnet, we think the more transparency there is, the better.
However, in this article we spoke to some commentators who, although they said active share is ultimately a useful measure to look at, cautioned investors against making it the sole basis of an investment decision.
Rob Harris, chief executive officer at Majedie, said: “We believe active share to be an informative but relatively crude metric – like so many other similar portfolio analysis tools.”
We also pointed out that underperforming funds can have a high active share. Manek Growth, for example, has a very active share of 97 per cent...
Performance of fund versus sector and index over 15yrs
Source: FE Analytics
Multi-asset income funds thrash growth rivals over all time periods
FE Trustnet research this week also showed that multi-asset funds with an income focus have consistently outperformed their growth rivals over the short, medium and long term.
In some cases, multi-asset income funds have beaten the average return of their sector by more than 10 percentage points.
Strong performers included Ecclesiastical Higher Income and Invesco Perpetual Managed Income, which have both outperformed their respective sectors over one, three, five and 10-year periods.
To get the full details of the study, take another look at the whole story.
