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The niche funds that consistently deliver the goods

28 August 2014

FE Trustnet looks at some of the most consistent funds that don’t sit in an easily comparable sector.

By Jenna Voigt,

Editor, FE Investazine

The niche nature of funds in the IMA Specialist sector means they tend to underperform in certain periods when their asset class or areas of focus is out of favour.

Because these funds tend to be focused on a particular area of the market – such as financials, biotech or gold – there are periods where they can suffer significant losses if sentiment turns against them.

This is why investors in specialist funds need to take a slightly longer view because if they can stick with these portfolios over the cycle, they can often give portfolios an extra kick.

However, there are some funds out there that don’t sit in easily comparable sectors, yet have delivered consistent outperformance relative to their chosen benchmark.

FE Trustnet looks at three of the most consistent specialist funds with five year track records.


Polar Capital Healthcare Opportunities

The five FE Crown-rated Polar Capital Healthcare Opportunities fund has proven itself a strong player in the healthcare space since its launch five years ago.

The fund aims to achieve capital gains by investing in healthcare stocks – a favourite for the likes of star UK equity income manager Neil Woodford – but the fund offers investors a bit of diversification by looking at healthcare and pharmaceutical leaders around the world.

Among the fund’s top holdings are European pharmaceutical giants Roche and Bayer as well as smaller players in the US like medical device company The Cooper Companies and pharmaceuticals and healthcare products firm Abbott Laboratories.

Since launch in April 2009, the fund is up 189.41 per cent, compared to 135.4 per cent from its benchmark – the MSCI World Health Care index.

Performance of fund and index since 2009

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Source: FE Analytics


The fund, headed up by Dan Mahony and Gareth Powell, has also delivered positive returns in each calendar year since launch, outstripping the MSCI World Heath Care index by nearly 7 percentage points so far this year, up 20.24 per cent.

In fact, the only year the fund didn’t outperform the index was 2011 – Polar Healthcare Opportunities gained 8.7 per cent that year while the index made 9.7 per cent, according to FE Analytics.

Polar Capital Healthcare Opportunities has ongoing charges of 1.24 per cent.



First State Indian Subcontinent

The five FE Crown-rated First State Indian Subcontinent fund, managed by FE Alpha Manager David Gait, has managed to outperform the MSCI India index in every calendar year since launch, apart from 2007.

Though the fund lost money in the financial crisis of 2008 and again in the down markets of 2011, it protected better than the index and rebounded more quickly as markets rallied.

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Source: FE Analytics


This consistent outperformance has led to strong gains over the longer term and with sentiment improving in India following this year’s prime ministerial election of economic reformist Narendra Modi, the fund is certainly one to consider for exposure to the region.

Since launch in November 2006, the fund is up 190.19 per cent, more than doubling the returns of the index, which gained 73.86 per cent.

Performance of fund and index since 2006

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Source: FE Analytics


In addition to India, the fund aims to deliver capital growth through investment in companies based in Pakistan, Sri Lanka or Bangladesh.

The portfolio has ongoing charges of 1.15 per cent.


CF Ruffer Pacific


According to its own objective, the £251.3m CF Ruffer Pacific fund aims to deliver consistent positive returns by investing in a diversified portfolio of Asia Pacific equities.

It is also able to use some fixed income securities, cash and derivatives to help protect on the downside.

The fund also makes use of passive investment scheme and the current top holding in the portfolio is the DB X-Trackers CSI300 ETF.

Run by FE Alpha Manager Mary McBain, the fund has lived up to its aim, consistently beating the MSCI Asia Pacific index, returning 97.65 per cent since McBain took over the portfolio in October 2006. The index made 56.55 per cent.


Performance of fund and index since 2006

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Source: FE Analytics


The fund has consistently outperformed the index in each calendar year since McBain took the helm, losing just 1.83 per cent in 2008 when the index plummeted 19.49 per cent.

However, the portfolio did fall farther than the index in the down markets of 2011, shedding 17.36 per cent while the index fell 14.48 per cent.

So far this year, CF Ruffer Pacific is up 10 per cent while the index has gained 7.05 per cent, according to FE Analytics.

Among the fund’s top holdings are China Mobile and a number of automotive manufacturers including Honda Motor and Mabuchi Motor.

The majority of the portfolio’s assets are invested in the Pacific basin, with cash as the second highest weighting – currently sitting at 19 per cent of the fund. Japan makes up the third highest weighting at 11 per cent.

The fund has ongoing charges of 1.29 per cent.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.