The UK fund market is dominated by a number of well-known names that many investors will likely hold as a core part of their portfolio.
Whilst these funds may continue to dominate the market, investors should be aware there are many other options available, some of which should perhaps warrant closer attention.
We’ve highlighted three lesser known names that we believe have at least as good a chance of outperforming as the better-known household names.
Aberdeen Asian Equity vs Matthews Asia Pacific Tiger
Aberdeen has built a highly successful track record in Asia on the back of a robust philosophy, a repeatable process and key decision makers constructing portfolios in the best interest of clients.
Not much has changed in the last decade, apart from the assets they manage, with Aberdeen Asia now managing over $70bn in primarily Asian equity products. But there are many fund managers to choose from in the Asian market, and in recent years some of these managers have proven to be very skilled investors.
In our view, one of these is Matthews Asia, a predominantly institutional Asian Investment specialist, based in San Francisco. The Matthews Pacific Tiger fund is run by one of the most experienced and credible portfolio managers in the industry, Sharat Shroff.
His $5bn flagship strategy focuses on high quality companies with long-term, durable growth potential. The portfolio tends to have a bias towards Asian consumer orientated companies, with high barriers to entry and strong business models, which can deliver above average growth over a three-to-five year period.
We believe the lower level of assets under management has in this instance helped alpha generation and outcomes for clients. The UK-registered Ucits, the Matthews Pacific Tiger Fund, stands at just over $500m, and so whilst it has garnered some attention, clearly it is a lot less well known on these shores.
GLG Japan CoreAlpha vs Eastspring Japan Dynamic
Japan is a back on the agenda at present, with a lot of allocators feeling more positive about the market than they have been for years.
As buying value stocks in Japan has worked long term, many have opted for the GLG Japan CoreAlpha Fund as their favoured way to invest in Japan. The fund certainly has a strong track record, albeit it can be a little volatile.
Our preference in the space has been with a lesser known Singapore-based manager, Eastspring, part of the broader Prudential group.
Eastspring manage around $11bn in Japanese equities, and over $170bn in total. Whilst the fund also has a value bias, it has benefited from a greater ability to invest in small- and mid-cap companies, and to a limited extent, a willingness to invest in undervalued growth companies that more traditional Japanese value managers tend to avoid. The five-strong investment team also has excellent stock picking capabilities.
Whilst GLG remains an attractive option, Eastspring has managed to outperform in nine of the last 10 years with a higher return, but lower volatility.
JP Morgan US Income vs BNY US Equity Income
For those seeking income in the perennially difficult US market, the JP Morgan US Equity Income Fund is a solid performer. The fund currently amounts to $3bn in assets, whilst Clare Hart and team look after $32bn in total.
A new addition to the market in the last 12 months has been the BNY US Equity Income Fund. The fund is run by BNY affiliate The Boston Company and lead Portfolio Manager John Bailer and team. This combines the best of value orientation with the discipline of dividend paying companies.
Whilst 2017 has proved a difficult year given the outperformance of growth stocks, the broader mirrored strategy has done well in a range of market conditions since the fund’s launch in 2011.
Today the fund is biased towards financials along with a number of stocks and sectors that may benefit from the recent US tax reform. This, along with the fact that value has lagged growth for such an extended period and is perhaps due to reverse, makes it an interesting alternative within the space.
Nick Wood is head of investment fund research at Quilter Cheviot. All views are his own and should not be taken as investment advice.