The multi-manager is alarmed by how much money is going into the same multi-billion pound funds via model portfolios and asset allocation tools. "Sir John Templeton, one of the great investors of the 20th century, said that you should never follow the crowd and should always avoid the popular," said Potter.
"Opportunities are most potent in funds that are involved in creating their track record rather than those that are living off of it."
Here is Potter’s selection of funds for investors looking to drift away from the herd.
PFS Chelverton UK Equity Income
"PFS Chelverton UK Equity Income is a very different portfolio to the rest of its peer group. Managers David Horner and David Taylor have a valuation approach which is a very sensible way of going about things. It’s similar in many ways to Gervais Williams' MAM fund, albeit with a small cap as opposed to a multi-cap bias."
"In the equity income space, as with a lot of other sectors, the majority of investors are buying conventional wisdom and my concern is that there is the possibility that they may get stuck in large, stodgy funds. In a choppy market it is very difficult for big funds to change their strategy quickly and investors may find they’ll end up with stodgy returns."
Data from FE Analytics shows that the five crown-rated fund has returned 61.76 per cent over the last three years. In the Equity Income sector only Henderson UK Equity Income and Unicorn UK Income have done better over the period. The average fund in the sector has returned 35.66 per cent.
Veritas Global Equity Income
"Veritas Global Equity Income is a fund which is well known among professional fund managers but not widely used by private investors and, as far as I know, does not appear in model portfolios because it is offshore. People are immediately turned off by the added complexity of dealing with Dublin."
"It’s one of the few funds that I’d buy with my own money every day of the week without even thinking. Anybody who is in the market for the medium- or long-term should be holding it."
Our data shows that the fund is one of the leading lights in the Global sector, with top-quartile returns over one, three and five years.
Managers Charles Richardson and Andy Headley believe that the market will, for at least the next six months, behave schizophrenically and they are therefore looking to hold companies that can navigate a wide array of different global scenarios.
The fund has a minimum initial investment of £30,000 and may be out of reach of some investors.
Rathbone Global Opportunities
"James Thomson’s £164m fund has a mid/small cap bias. He has not been around for very long but he understands cashflows of businesses and earnings reports – he is an old-fashioned fund manager in a lot of respects. He has a fantastic work ethic and is a real high-quality investor."
"Some IFAs have minimum fund size requirements that can immediately screen out funds like this."
Our data shows that Rathbone Global Opportunities is top-quartile for performance over one, three, five and 10 years. The portfolio has beaten its sector and benchmark in nine of the last 10 years – 2008 being the only exception.
Thomson is an FE Alpha Manager and the fund is one of the few in its sector with five crowns.
JPM Global Consumer Trends
"Manager Peter Kirkman is an old hand in the investment management world and with this fund he is clearly looking for a new challenge. It is a product which taps into the growing global trend of the rise of the consumer but it is not one that people would immediately think of."
"Of course it’ll go up and down along with the markets but I think the long-term record will show significant outperformance."
Kirkman built his reputation running a Japan equity fund for JPM. Our data shows that JPM Global Consumer Trends has returned 31.87 per cent over the last three years compared with an average of 26.84 per cent from its peer group composite.
Coupland Cardiff Asia Alpha
"Looking to Asia, most people have tended to go for the First State Asia Pacific fund but with it being soft-closed investors need to look further afield. I really like Coupland Cardiff Asia Alpha – another offshore vehicle, as well as the Tiburon Taipan fund. Both are focused on smaller companies, which is an area that few people look at in Asia."
Our data shows that Coupland Cardiff Asia Alpha has returned 70.28 per cent over the last three years, more than double the average Asia Pacific ex Japan fund.
Tiburon Taipan has yet to achieve a three-year record but since its launch in March 2010 it has returned 4.57 per cent compared with 1.76 per cent from the sector average.