Kearney heads up the firm’s range of multi-manager funds alongside Graham Duce.
He highlights several portfolios that have been staples of the firm’s range of multi-manager funds.
JO Hambro UK equity range
"The UK team at JO Hambro is a team we’ve had money with for a long time," Kearney said.
He particularly likes the JOHCM UK Dynamic and UK Growth portfolios, headed up by FE Alpha Managers Mark Costar and Alex Savvides.
"We’ve had money with Mark for the better part of 10 years. He sticks to his principles, but you have to accept that there may be periods of underperformance," he said.
Kearney says the fund has a bottom-up stockpicking style, which performs so well because of Costar’s high-conviction calls.
"He sticks to his guns and buys the stocks that he wants to very cheaply. If he doesn’t have an idea, he spreads the money across the other holdings in his portfolio," he said.
Both funds have outperformed the IMA UK All Companies sector and the FTSE All Share over one and three years.
The UK Growth portfolio, which has a longer track record, has also beaten both over five and 10 years, returning 210.01 per cent over the last decade.
Performance of funds vs sector and index over 10yrs
| Name | 1yr (%) | 3yrs (%) | 5yrs (%) | 10yrs (%) |
|---|---|---|---|---|
| JOHCM UK Dynamic | 29.22 | 42.07 | N/A | N/A |
| JOHCM UK Growth | 31.31 | 27.23 | 64.43 | 210.01 |
| FTSE All Share | 19.7 | 26.63 | 34.94 | 161.39 |
| IMA UK All Companies | 20.18 | 28.86 | 32.27 | 150.16 |
Source: FE Analytics
The funds require a minimum investment of £1,000. The Growth fund is slightly cheaper, with an ongoing charges figure (OCF) of 1.39 per cent, while the Dynamic portfolio has an OCF of 1.5 per cent.
Savvides explained the style of his Dynamic portfolio in great detail in a recent interview with FE Trustnet.
From an income perspective, Kearney also champions Clive Beagles’ four crown-rated JOHCM UK Equity Income fund.
"We’ve been a holder of that fund for a long time," he said. "They were early into financials and that has paid off very well for them."
The UK Equity Income portfolio, which focuses on income-paying stocks further down the market cap spectrum, has been one of the best funds in the IMA UK Equity Income sector over one, three and five years.
Since launch in November 2004, it has made 129.6 per cent while the sector and index have gained 79.08 per cent and 93.18 per cent, respectively.
Performance of fund vs sector and index since launch
Source: FE Analytics
The fund is yielding 4.6 per cent.
It requires a minimum investment of £1,000 and has a total expense ratio (TER) of 1.28 per cent.
BlackRock UK Focus
Another UK portfolio Kearney likes is the recently launched BlackRock UK Focus.
"A fund we’ve gone into in the last year is the BlackRock UK Focus fund," he said. "In the sense that JO Hambro is a specialist fund house, BlackRock is everything they’re not."
Due to the differences in management style, Kearney says the strategy is perfect to blend alongside the JO Hambro funds.
"We went in day-one with them. You’re always going to get periods of time where you have to be patient with the outcome, but it has performed very well."
Previously run as a segregated mandate, BlackRock launched the fund, run by Luke Chappell and Imran Sattar, into the market in October 2011.
Since then the £53.7m fund has gained 24.71 per cent, edging out the FTSE All Share index and IMA UK All Companies sector, which gained 24.68 per cent and 24.27 per cent respectively.
The fund is yielding 2.08 per cent.
Kearney says holdings such as UK high street retailer Next have added a boost to the fund. Its highest weighting is to services, at 19.6 per cent. The fund is also invested in the out-of-favour oil and gas sector, followed by financials.
Threadneedle American Extended Alpha
In the US, Kearney and Duce have long been fans of the outperforming Findlay Park American; however, as the fund is soft-closed they have been looking at other options for exposure to the sector.
Kearney likes the £670.9m Threadneedle American Extended Alpha fund, managed by Stephen Moore.
"He’s very pragmatic and takes a firm view about the companies he’s looking at," he said.
Kearney adds that Moore likes to keep a balance in the portfolio: for example, if he is overweight financials, he will also be overweight in more defensive healthcare stocks, which adds a layer of stability to the fund.
The fund, which is benchmarked against the S&P 500, is top quartile over three and five years. It has lagged the IMA North America sector and index over the short-term.
Over five years, the fund has made 82.2 per cent while the sector and index have gained 65.69 per cent and 53.71 per cent respectively, according to FE Analytics.
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
Among the fund’s top-holdings are US pharmaceutical giant Pfizer, Apple and Exxon Mobil.
Its highest sector weighting is to basic materials, followed by telecommunication, media and technology stocks.
The fund requires a minimum investment of £2,000 and has an OCF of 1.7 per cent.