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Funds for your ISA: Global

FE Trustnet takes a closer look at a fund that has delivered strong returns over the long-term, despite being hit hard during the slump of 2008.

By Mark Smith, Reporter, FE Trustnet Follow
Friday March 09, 2012


Rathbone Global Opportunities is one of the leading funds in the IMA Global sector, the latest FE Trustnet research shows. The £150m product has returned 128 per cent over the last 10 years, more than three times as much as the sector average.

Performance of fund vs sector over 10-yrs

ALT_TAG

Source: FE Analytics

It has also fared well over the short-term. Returns of 1.82 per cent and 29.85 per cent comfortably put the fund in the top-decile over one and three years respectively.

The fund's FE Alpha Manager James Thomson has been buying up cyclical stocks to take advantage of the improving economic environment but he maintains what he calls a weather-proofing system to protect against market shocks.

"I’ve put money into tobacco and the value end of retailers," he told FE Trustnet in January. "Those are areas which are more insulated from the economic cycle and have done well over the last few years, protecting the fund for those roller-coaster moments, but the time for buying pure defensives is over."

While Thomson runs a concentrated, high-conviction fund, the focus on protecting against downsides means it has a lower volatility, at 13.36 per cent, than the Global sector, which scores 15.7 per cent.


The IFA's view

"Rathbones as a whole have been through a process since the financial crisis of scaling back risk across their range. They got caught out when markets fell in 2008 and don’t want that to happen again," said Tim Cockerill, head of collectives research at Rowan Dartington.

"I’m not sure whether I truly believe that there are bullet-proof stocks out there but Thomson is what I call a genuine stock-picker with a keen eye for spotting opportunities at good valuations relative to the market."

"It ticks a lot of boxes for inclusion in your ISA, albeit for the more racy investor. Globalisation has made this sort of investment very attractive and the opportunities are almost limitless, but having such a large universe raises the question of how to narrow down to 40 or 50 stocks."


Alternatives

Cockerill says that while the strategy behind the Rathbone Global Opportunities fund is sound, investors need to be mindful of how they include such a diverse investment in their portfolio.

"Something like the soon-to-be-launched Schroder Small Cap Discovery fund is a bit more focused and is easier to build into a portfolio from an asset allocation perspective," he commented.

The Schroders fund is focused on achieving capital growth by investing in smaller companies in emerging markets, will be available from 15 March and is run by Matthew Dobbs.

M&G Global Basics is another option. With nearly £6bn in assets under management the fund is one of the most popular in the IMA universe and with good reason: over the last 10 years it has returned 211 per cent. FE Alpha Manager Graham French invests in companies involved in primary and secondary industries.


Verdict

James Thomson is a fund manager who aims to look after his investors. He is interested in making hay when the sun shines but also preparing for rain. Rathbone Global Opportunities is certainly a viable option for investors with a long investment horizon although they should think carefully about how well it complements the rest of their portfolio.



 
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