Jupiter European, Stewart Investors Asia Pacific Leaders and Marlborough UK Micro-Cap Growth are examples of funds that investors can buy, hold and forget about, according to FundCalibre’s Darius McDermott.
With the bull run seeming to teeter as central banks begin to tighten rates and withdraw liquidity, investors may want to consider products that can be bought with a long-term view in the hope they will hold up across most market conditions.
In a new series, FE Trustnet asked several industry experts which funds are good as core long-term holdings for most type of investors, starting with FundCalibre managing director Darius McDermott.
Stewart Investors Asia Pacific Leaders
A fund investing in shares of companies based in, or having significant operations in, the Asia Pacific region is first on McDermott’s list: Stewart Investors Asia Pacific Leaders.
“Asia's stock markets can be pretty volatile, so a fund that loses less in falling markets can really come into its own. This is one such fund,” McDermott said.
The £7.8bn strategy is overseen by FE Alpha Manager David Gait alongside Sashi Reddy.
“The manager has established a strong track record of defending on the downside. It can lag in rapidly rising markets, as it did last year, but the focus on quality, defensive businesses with strong governance, leads the fund to outperform when all around is falling in value – as evidenced in this October's sell-off,” McDermott said.
“Over the long term this means total risk-adjusted returns are excellent.”
Indeed, Stewart Investors Asia Pacific Leaders has delivered a strong track record since its launch in 2003, up by 646 per cent compared with the MSCI AC Asia Pacific ex Japan index's gain of 390.70 per cent.
The fund has an ongoing charges figure (OCF) of 0.89 per cent.
Jupiter European
The next strategy highlighted by McDermott is Alexander Darwall's £5.4bn Jupiter European fund. The strategy offers investors access to a high-conviction portfolio of European equities with a bias towards medium and larger companies.
Performance of fund vs sector and index under Darwall
Source: FE Analytics
“The manager has developed a real aptitude for recognising patterns of success in company business plans and management teams and has a coherent and consistent investment process that has a record of success in different macroeconomic environments. He has an outstanding long-term track record,” said McDermott.
Indeed, the fund has delivered an outstanding performance since Darwall took over in 2001.
As the above chart shows, Jupiter European has been top quartile over one, three and five years and has significantly outperformed the FTSE World Europe ex UK and the average fund in the IA Europe ex UK sector under Darwall.
It has an ongoing charges figure (OCF) of 1.03 per cent.
Marlborough UK Micro-Cap Growth
The next fund McDermott believes investors can buy, hold and forget about is Marlborough UK Micro-Cap Growth, run by which he believes is one of “the best small-cap boutiques in the country”.
The £1.1bn strategy is headed up by FE Alpha Manager Giles Hargreave alongside Guy Feld.
“Marlborough UK Micro-Cap Growth has a small- and micro-cap focus and the process, while perhaps not as clearly defined as some others, has held up well across a wide range of market conditions,” he said.
As FundCalibre’s managing director explained, Hargreave and Feld use their views on the wider economy to filter out large numbers of stocks and sectors before undertaking thorough company meetings and analysis.
As such, small positions of less than 2 per cent are taken initially, with the team adding to them as their story unfolds.
“The long-term track record of this fund is exemplary,” noted McDermott.
Indeed, Marlborough UK Micro-Cap Growth has beaten its peers and benchmark for most of the time since its launch.
Performance of fund vs sector since launch
Source: FE Analytics
While the average fund in the IA UK Smaller Companies sector has delivered a 298.35 per cent gain since 2004, Hargreave and Feld’s fund has made a 657.33 per cent total return.
It has an ongoing charges figure (OCF) of 0.79 per cent.
Man GLG UK Income
FE Alpha Manager Henry Dixon’s Man GLG UK Income is next on McDermott’s list.
“This UK equity fund has a value-driven approach but has managed to outperform even when this style is not in favour,” he said.
“It invests predominantly in UK companies of all sizes but can also invest in continental European companies that derive a substantial part of their revenues from the UK.”
The £660.9m fund also has the ability to invest up to 20 per cent in corporate bonds, a flexibility that McDermott noted sets Man GLG UK Income apart from the majority of its peers in the UK Equity Income sector.
According to the FE Invest team, which has included Man GLG UK Income on its Approved List, the performance of this fund should be considered over a minimum of three years.
“The recovery process takes time to come to fruition and then it needs to be acknowledged by the market. Therefore, it is a strategy that requires patience,” they said.
Man GLG UK Income has been top quartile over three and five years and is up by 53.82 per cent since Dixon took the helm in 2013.
The fund yields 4.50 per cent and has an OCF of 0.90 per cent.
Jupiter Merlin Balanced
The final fund for investors to buy hold and forget about is a multi-asset fund of funds, the £1.6bn Jupiter Merlin Balanced fund.
The fund is overseen by Algy Smith-Maxwell, John Chatfeild-Roberts, Amanda Sillars and David Lewis, who aim to outperform the IA Mixed Investment 40-85 % Shares sector average over the long term.
“For one-stop shops, Jupiter is one of the best multi-manager, multi-asset teams around.” said McDermott. “They seek to take advantage of short-term market movements that create opportunities and also take defensive measures where appropriate.”
As McDermott noted, the team uses its expertise to select who they believe to be the best fund managers in each asset class and region, with the aim of producing the best possible returns in “any given macroeconomic environment”.
Performance of fund vs sector since launch
Source: FE Analytics
Since launch in 2012, Jupiter Merlin Balanced has delivered a 312.94 per cent total return compared with a 202.21 per cent gain for the average fund in the IA Mixed Investment 40-85% Shares sector.
The fund has an ongoing charges figure (OCF) of 1.62 per cent and yields 2.1 per cent.