Rathbone Global Opportunities
has been included in The Share Centre’s buy-list of 120 funds, after 11 years of outperforming its sector and benchmark.
The fund has the freedom to invest in diverse regions, assets and sectors, and seeks to profit from growth outside the UK without direct exposure to emerging markets, which it views as too risky.
FE Alpha Manager James Thomson’s
portfolio is the fourth-best performer in the IMA Global sector over 10 years and is one of only two portfolios with top-quartile returns on a three-, five- and 10-year basis, according to data from FE Analytics
Performance of fund vs sector and benchmark over 10-yrs
Source: FE Analytics
The fund’s consistency is a particular strong point; since its launch, the portfolio has outperformed its peer group in nine of the last 10 years. The year 2008 is the only blip on Thomson’s record.
While the strong record of the fund hasn’t gone unnoticed, with only £169m assets under management (AUM) it is far smaller than many of its less consistent rivals.
Andy Parsons, head of investment research at The Share Centre, believes it could soon be set for a surge in popularity.
"James Thomson (pictured)
has been at the helm of Rathbone Global Opportunities since inception in 2001 and during that time he has built up a solid track record in terms of performance," he said.
Thomson carries out bottom-up stock analysis, aiming to discover companies that have strong potential but are so far realtively unknown.
Data from FE Analytics
shows the volatility of his portfolio – 17.86 per cent annualised over 10 years – is slightly higher than the 15.36 per cent average of its sector.
However, much of this is down to its dire performance in 2008, when it lost more than 39 per cent – around twice as much as its benchmark.
In a recent video with FE Trustnet,
Thomson said he had learnt from such mistakes
, and has since made more of an effort to weatherproof his portfolio from downside risks.
In the last three years, the fund has been significantly less volatile than both its benchmark and sector average, and lost less in the down-market of 2011.
Performance of fund vs sector and benchmark over 3-yrs
Source: FE Analytics
Parsons continued: "Investors will find that this fund has no direct exposure to the emerging markets, there is a greater mid cap presence than many of its peers and there is no currency hedging."
"In addition, with a flexible unconstrained investment mandate, [Thomson] is able to be very specific and has the ability to avoid sectors such as telecoms, utilities and pharmaceuticals when he doesn’t see any investable opportunities."
"The portfolio comprises of between 40 and 60 stocks, all of which will have, in the manager's mind, demonstrated that they: have a scalable and repeatable strategy without incurring significant costs; have an easy to understand business model; are prudent; have flexible management; and have barriers to entry and catalysts for share price movement through events such as contract wins and earnings upgrades."
Rathbone Global Opportunities has returned 48.14 per cent over three years, compared with 30.01 per cent from the average IMA Global Emerging Markets fund, and with significantly less volatility.
Parsons believes cautious investors can use a portfolio such as this one as a safer alternative to emerging market funds.
"Investing without boundaries has traditionally been seen as high risk and only appropriate for certain investors," he said. "However, this mindset and culture are changing."
"Investors have begun to appreciate that there is an abundance of high quality, well managed companies with strong balance sheets, which are innovative, have high barriers to entry and strong pricing power among many other attributes."
"In addition, as the world becomes ever more inter reliant, the listing of a company on a specific stock market does not necessarily provide a true representation of the main areas of its business and service operations."
"Global funds, provided you have the appetite for risk, demonstrate portfolio diversification of assets, regions and sectors."
"Therefore, the inclusion of a global fund in an investment portfolio has the potential to provide access to the best companies in a sector, and assets that a home market-bias cannot deliver directly," he finished.