Two funds in the IA Global sector have managed to make a positive return in every one of the past 10 calendar years, with both of these focusing on healthcare: L&G Global Health & Pharmaceuticals Index Trust and Schroder Global Healthcare.
Of the 152 funds in the sector with a track record of this length, another seven have made a positive return in nine of the past 10 calendar years, one of which also has a focus on healthcare – Fidelity Global Health Care – while a further three of these – First State Global Listed Infrastructure and the onshore and offshore versions of Morgan Stanley Global Brands – also focus on a specialist area.
IA Global funds that lost money in fewest no. of calendar years
| 2017 (%) | 2016 (%) | 2015 (%) | 2014 (%) | 2013 (%) | 2012 (%) | 2011 (%) | 2010 (%) | 2009 (%) | 2008 (%) | No. of positive yrs | Total return (%) | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| L&G Global Health & Pharmaceuticals Index Trust | 10.02 | 12.29 | 12.26 | 26.32 | 32.62 | 12.22 | 10.02 | 5.85 | 8.44 | 8.36 | 10 | 256.82 |
| Schroder Global Healthcare | 8.24 | 10.78 | 10.79 | 27.86 | 37.24 | 11.41 | 7.01 | 4.76 | 15.75 | 3.21 | 10 | 247.85 |
| Fidelity Global Health Care | 9.31 | 5 | 13.1 | 29.06 | 30.73 | 10.37 | -0.36 | 8.49 | 13.11 | 1.78 | 9 | 200.82 |
| Morg Stnly Global Brands | 15.02 | 25.3 | 11.85 | 11.95 | 17.85 | 9.04 | 9.92 | 16.13 | 16.26 | -1.95 | 9 | 237.5 |
| Morgan Stanley Global Brands | 14.76 | 25.51 | 12.01 | 11.92 | 17.66 | 9.4 | 9.39 | 18.16 | 18.09 | -4.08 | 9 | 240.3 |
| Seilern Stryx World Growth | 16.39 | 24.1 | 15.68 | 11.05 | 30.37 | 8.99 | 6.87 | 10.29 | 11.11 | -8.33 | 9 | 216.49 |
| Veritas Global Focus | 12.5 | 24.87 | 6.92 | 12.88 | 19.22 | 4.41 | 0.56 | 15.57 | 21.63 | -8.34 | 9 | 173.45 |
| Trojan Global Equity | 13.23 | 19.23 | 12.25 | 14.95 | 14.38 | 3.75 | 6.16 | 14.93 | 18.43 | -11.26 | 9 | 165.07 |
| First State Global Listed Infrastructure | 8.19 | 35.89 | 0.2 | 19.55 | 16.02 | 6.89 | 3.07 | 13.6 | 13.97 | -13.16 | 9 | 153.14 |
Source: FE Analytics
L&G Global Health & Pharmaceuticals Index Trust is a passive vehicle that tracks FTSE World index companies in the health, pharmaceuticals and biotechnology space. It has delivered a 256.82 per cent return over the past decade. The fund has ongoing charges of 0.31 per cent.
The £204.1m Schroder Global Healthcare fund, which has been managed by John Bowler since 2004, invests in healthcare and medical-related companies and has generated a total return of 247.85 per cent over the past decade. It has ongoing charges of 0.92 per cent.
Of the three more general IA Global funds that have lost money in just one of the past 10 calendar years, Seilern Stryx World Growth made the highest total return over the period in question at 216.49 per cent.
The fund aims to deliver outstanding absolute returns with moderate risk by investing in OECD (Organisation for Economic Cooperation & Development) companies of the highest quality, with proven track records, sound financials and predictability of future earnings growth.
To find companies of this type, manager Raphael Pitoun looks for evidence of the following characteristics: multinational businesses with exposure to the fast growing economies of the world; steady, non-cyclical demand for their products or services; unbroken earnings growth records over the last decade; global branded products or services sought after by developing market consumers; the potential for long term consistent earnings growth; high returns on equity, reflecting a technological advantage over their competition or uniqueness of their products or services; dynamic management, and internal resources sufficient to finance their global development and maintain their competitive position.
Stryx World Growth is £400m in size and has an annual management charge of 1.5 per cent. Its maximum drawdown – the amount investors would have lost if they bought and sold at the worst possible moments – and volatility score over the 10-year period stand at 27.65 and 15.48 per cent, compared with 36.99 and 14.8 per cent from the sector, respectively.
It has the highest FE Crown rating with five crowns, but it has limited platform availability.
Performance of funds vs sector and index over 10yrs
Source: FE Analytics
Next up with returns of 173.45 per cent over 10 years is Veritas Global Focus. The fund’s FE Alpha Managers Andrew Headley and Charles Richardson use a bottom-up stockpicking approach within certain themes they have identified with the aim of identifying superior businesses at reasonable valuations.
Headley and Richardson say they prefer market leaders in relatively stable industries where there is greater visibility of sustainable earnings and recurring revenues. The managers pay special attention to the level of free cash flow generated and also place an emphasis on company directors and the alignment of interests with shareholders.
They do not give consideration to country or global index weightings and as a result performance may be significantly different from that of the markets in which the fund is invested and major global indices.
The $3.3bn Veritas Global Focus fund has a total expense ratio of 1.63 per cent and three FE Crowns.
Its maximum drawdown and volatility score stand at 26.87 per cent and 14.89 per cent, respectively.
Next on the list is the £201m Trojan Global Equity fund, which made 165.07 per cent over the 10-year period. Its managers Gabrielle Boyle and George Viney aim to invest in “exceptional companies” with high returns on their invested capital sustained by durable competitive advantages, strong balance sheets and run by sensible management teams.
In a note to investors, the managers said the fund can be defined as much by what they don’t do as by what they choose to do.
“We don’t invest based on themes and we don’t invest in highly cyclical companies or restructuring situations where the hope is that returns will improve from low levels,” they explained.
“We don’t like overly complicated businesses; the world is complex enough. We study the financial reports and analyse our companies over a long period, meeting with management and getting to know the industry that the businesses operate in.”
The fund is concentrated with approximately 30 to 40 stocks, and turnover is low, typically below 20 per cent a year.
Trojan Global Equity has ongoing charges of 0.93 per cent. It has a maximum drawdown over the 10-year period of 21.42 per cent and a volatility score of 11.26 per cent – the lowest of any fund on the nine-strong list. The fund has three FE Crowns.