Many UK investors have some idea of the funds in their possession, but fewer can name even some of the star managers who run the funds in their pension or ISA, such as Neil Woodford or Richard Woolnough.
Even fewer will know that if they step on the Tube in the morning, they may well own a piece of it, or that their hard-earned money is helping to fund one of the world’s largest playing-card manufacturers.
A look into the heart of some of the most sought-after portfolios in the UK reveals a number of surprises.
Raven Russia
Most investors would balk at the thought of investing in property in politically volatile Russia, yet Neil Woodford (pictured), who is undoubtedly one of the best investors in the UK, holds this Russian property company in his £13bn Invesco Perpetual High Income fund. In spite of sitting in two out-of-favour areas – property and Russia – the trust had a strong 2012, returning 22.12 per cent.
It was hit hard by the financial crisis of 2007 and lost 89.13 per cent in that year, but it has since recovered most of those losses and is up 80 per cent over three years.
Performance of stock over 3yrs
Source: FE Analytics
The company’s portfolio is mainly made up of warehouses and it is currently 95 per cent let. It is fully let in Moscow, St Petersburg and Rostov.
Numis says that the company is well set for growth, with 49,000m2 of new space set to be put on the market, and adds that it is an attractive investment given the discount and the favourable letting market for Russian warehouses.
Taiwan Semiconductor Manufacturing
With headquarters on the other side of the world in Taiwan, this company is rarely given a second thought by UK investors.
Yet the semiconductor manufacturer features in the top-10 holdings of a whopping 80 portfolios in the IMA universe, and with a market cap of £20bn, it is no wonder.
While the man on the street is unlikely to have heard of the company, they likely use their products every day. Apple has been using the company's semiconductor technology in devices such as the iPhone and iPad since 2011.
The niche company is one of the top holdings in Aberdeen’s range of emerging markets and Asia Pacific portfolios, including the five crown-rated Aberdeen Emerging Markets fund.
It also features in the BlackRock CIF Emerging Markets Equity Tracker, Newton Asian Income and Dr Mark Mobius’s Templeton China.
Kone
If you’re lucky enough to visit the gargantuan Shard, currently the tallest building in Europe, the chances are you’ll get up it using an elevator built by this 100-year-old Finnish engineering company.
Kone is the fourth-largest manufacturer of elevators worldwide – have a look at the lift the next time you are heading into any office for that matter – and a leading manufacturer of escalators.
The stock features in Alister Hibbert's highly popular five crown-rated BlackRock European Dynamic fund.
Five other funds in the IMA universe – BlackRock Continental European Income, GAM Star Continental European Equity, Henderson European Growth, Henderson European Special Situations and JOHCM All Europe Dynamic Growth – hold the stock in their top-10, meaning there’s a good chance you own a piece of a people-mover.
Transport for London
If you are among the 4 million people who ride the London Underground or the 6.5 million who board a London bus every day, it’s unlikely you think about the fact that you may just own a piece of the transport operator – or even better, it may just owe you money.
Yet this is the case for anyone with a holding in FE Alpha Manager Richard Woolnough’s massive M&G Corporate Bond fund. Transport for London is only a small holding in the £6.1bn portfolio, but the 0.47 per cent allocation still equates to £30m.
While much of the London Underground has been around for more than century, TFL as we know it today was created in 2000 and didn’t take over responsibility for the Tube until 2003.
Two funds hold the bond in their top-10 – Kames Investment Grade Bond and Kames Sterling Corporate Bond.
G4S
After the staffing debacle during the Olympics this summer, you may be surprised to discover you’re a shareholder in global security firm G4S.
However, the £5.1bn M&G Global Basics fund and the £1.2bn M&G Managed Growth portfolio both hold the stock in their top-10. Both portfolios are headed up by FE Alpha Manager Graham French.
The Crawley-based company is the world’s largest security company in terms of revenue and has operations in approximately 125 countries.
Britvic
FE Alpha Manager Francis Brooke likes a bit of fizz in his Bucks and is heartily backing the number-two producer of soft drinks in the UK in his five crown-rated Trojan Income fund.
Following a merger with AG Barr announced in November last year, the Chelmsford-based firm will be part of the largest soft drinks conglomerate in Europe.
Reflecting a positive view of the merger, Brooke has upped his weighting in Britvic, from 0.8 per cent at the end of November 2012 to 2 per cent.
Cavendish UK Balanced Income is the only fund to take a heavy punt on the soda maker in its top-10 biggest holdings.
Carnival
Those investors with a few silver threads among the gold may consider taking to the waves for a lengthy game of bridge on a cruise holiday, but most would be shocked to find out they owned part of the cruise line.
However, with this British-American cruise company, that is exactly the case. The cruise liner makes up 2.49 per cent of star contrarian manager Richard Buxton’s Old Mutual UK Alpha fund, which he took over earlier this month.
Carnival is the world’s largest cruise ship operator, running Carnival Cruise lines in the US, the Cunard and P&O lines in the UK and Costa Cruises in Italy.
Five funds in the IMA universe hold the cruise line in their top-10, including the GLG UK Growth and UK Select portfolios, and the Schroder Prime UK Equity fund.
De La Rue (DLAR)
The investment irony about De La Rue is that it has, quite literally, several licences to print money. Investors in FE Alpha Manager Tom Dobell’s £7.4bn M&G Recovery fund own some of this high-spec, super-secure printing firm, which is also one of the principal manufacturers of playing cards.
The Basingstoke-based firm’s main operations are security printing, papermaking and cash-handling systems.
It has a long-standing history in the manufacturing of high-security paper and printing technology, which it sells to more than 150 countries.
It has recently been taken over by new management – a theme that Dobell often looks for when picking stocks.
It had big problems in production in 2010, but its share price has since recovered.
Performance of stock over 5yrs
Source: FE Analytics
FE Alpha Manager Mark Martin is also a big admirer of the company and holds it in his Neptune UK Mid Cap fund.
De La Rue has a market cap of just under £1bn and at the time of writing it is yielding 4.38.
Bango
You’ve heard of most of the UK’s telecoms companies, so why should AIM-listed mobile technology company Bango be in your portfolio?
Well, it is ahead of the game and specialises in one-click mobile app-based payment systems, making it cheaper and easier for small merchants to accept paperless transactions.
Since the end of December 2012, the US- and UK-based firm has expanded as a holding of the Liontrust Special Situations fund, run by the FE Alpha Manager duo of Anthony Cross and Julian Fosh.
Bango has grown quickly in recent times, outperforming the FTSE AIM index over one, three and five years.
Earlier this year, it picked up $10m in funding to launch in to emerging markets, leaving it poised for another rapid rise if all goes well.
Cavendish AIM is the only fund in the IMA universe that holds Bango in its top-10.
Blinkx
Video is the name of the internet game and this AIM-listed internet media platform is one of the higher-conviction holdings in FE Alpha Manager Richard Plackett’s BlackRock UK Special Situations portfolio.
The company, which is split between San Francisco and London, connects online video viewers with content publishers and distributors. It joined London’s small cap AIM index in May 2007.
Only two funds in the IMA universe hold the stock in their top-10, including the five crown-rated MFM Techinvest Technology fund.
So there you have it, there are diamonds in the dust.
This article was first published in FE Trustnet Investazine. To download last month’s edition free of charge, click the icon below.
