It was a good year for equities in 2012 and the members of FE Trustnet's
editorial team believe that investors will once again be rewarded for holding riskier assets this year.
Here, the five-strong team highlight the funds – either open- or closed-ended – that they believe will top the total-return tables on both an absolute and relative basis in 2013.
F&C Global Smaller Companies IT
Reporter Thomas McMahon thinks F&C Global Smaller Companies investment trust is poised to deliver stellar returns in 2013.
"I think smaller companies will continue to outperform this year, and that there will be no sudden shocks – such as a break-up of the eurozone – to send markets crashing."
"I also like the managers’ heavy positioning in Japan, which I think will see at least a short-term boost following the election of the new government there. Japanese smaller companies are already doing well compared with the country’s large caps."
Manager Peter Ewins has delivered 77.43 per cent over a five-year period – almost twice as much as the trust's composite benchmark, split 70/30 between the MSCI World ex UK Small Cap and Hoare Govett UK Smaller Companies (ex ITs) indices.
Performance of trust vs benchmark over 5-yrs
Source: FE Analytics
In 2012, F&C Global Smaller Companies returned 22.39 per cent, putting it around 6 percentage points ahead of its benchmark.
The trust has an ongoing charges fee of 0.81 per cent, excluding performance fee. It has £288m assets under management (AUM).
Marlborough UK Micro Cap Growth
"I’m going for Giles Hargreave’s
Marlborough UK Micro Cap Growth fund," said news editor Joshua Ausden.
"Small caps were dominant last year in spite of all the macro uncertainty. Given that things seem to be looking up at the moment, I think this kind of fund could see big, big gains this year."
"Hargreave has proven time and time again to be a good stockpicker. He’s topped the tables consistently before, and is himself very bullish at the moment
, so I can’t think of a manager I’d rather be invested in right now."
Performance of fund vs sector since launch
Source: FE Analytics
Only three UK Smaller Companies funds have returned more than Marlborough UK Micro Cap Growth since its launch in October 2004. Hargreave's fund performed in line with its sector in 2012, with returns of 22.98 per cent.
The £115m Marlborough UK Micro Cap Growth portfolio requires a minimum investment of £1,000 and has a total expense ratio (TER) of 1.52 per cent.
CF Eden UK Select Opportunities
"There is the general feeling that equities will prosper this year and I think this fund is in a good position to take advantage of this," said reporter Alex Paget.
"CF Eden UK Select Opportunities has been top quartile over the last year and Leigh Himsworth
has a proven track record as well. It does have exposure to the FTSE 100, but I like the fact that its largest weighting is to the FTSE 250 – an area that typically does better when the markets are on the up."
"The portfolio’s largest sector weighting is to financials, which again I’d expect to do well if the markets rise."
Himsworth’s £33m fund has returned 20.06 per cent since it was launched in September 2011, compared with 17.37 per cent from the UK All Companies sector, and 16.09 per cent from the FTSE All Share. The manager (pictured)
used to head up the four crown-rated Franklin UK Mid Cap fund.
CF Eden UK Select Opportunities requires a minimum investment of £1,000 and has a TER of 1.96 per cent.
Henderson UK Equity Income
Features editor Jenna Voigt is a little more cautious than her colleagues and has opted for a more defensively minded portfolio.
"I’m not ultra bearish, but I don’t think it will be quite as positive as many are suggesting this year," she said. "The markets actually performed very well in 2012, but I would be cautious to pile into something high-risk right now."
"Henderson UK Equity Income, headed up by James Henderson
, has a good balance between growth and capital. It’s got a mixture of blue chips and punchier mid caps and has a decent yield [3.3 per cent]."
The fund is a top-quartile performer over one and three years, with returns of 25.72 and 55.56 per cent respectively. It has been more volatile than both its sector and FTSE All Share over these periods, however.
Henderson UK Equity Income has a TER of 1.75 per cent and requires a minimum investment of £1,000.
Aberdeen Emerging Markets
Production editor Anthony Luzio is less UK-focused than many of his colleagues and believes 2013 could be a good year for emerging markets.
"I don’t think this year will be plane sailing, but it seems things are looking up for the markets," he said. "Emerging markets have had a tough time and are starting the year from a low level, so this is the area I am most optimistic about – particularly given that the situation in China has improved."
"I still expect it to be quite volatile this year, so Aberdeen Emerging Markets – which has a proven record in both rising and falling markets – is my choice."
Performance of fund vs sector and index over 10-yrs
Source: FE Analytics
Few funds have performed as well as Aberdeen Emerging Markets in the last decade; according to FE data, it is up 554.71 per cent over 10 years, beating its sector and benchmark by more than 200 percentage points.
Aberdeen Emerging Markets remains open to new investors, but the group says it is looking at ways of stemming inflows. The £3.6bn portfolio requires a minimum investment of £500 and has a TER of 1.93 per cent.
What do you think of our fund picks? Please let us know in the comments section below.
In an article later today, a selection of industry professionals will tell us exactly what they think of our choices. If you would like your fund picks for 2013 analysed by industry professionals, please leave a comment below or email us on email@example.com