World class investments – who has made the Bestinvest fund squad?08 June 2018
The World Cup is now just days away, sticker books are being completed, sweepstakes are being finalised and euphoria is rising. As any sport aficionado knows, how far your team will get to in the tournament depends on both individual talent but also the ability of the squad to work effectively as a team of eleven players. Each player has a specific role with strengths that will complement other players’ skills and that means having players that can defend, play midfield and, of course, score goals. If a team is too reliant on one star player, it can easily unravel if they become injured.
Putting together an investment portfolio is really no different says leading online investment platform Bestinvest: you need fund managers who can defend your wealth when the outlook is no longer rosy as well as those who are agile, able to spot opportunities and deliver high scoring returns.
As when you are drafting a fantasy football team, you wouldn’t expect it to make the finals if it is overly defensive with no chance of a goal being scored. Indeed, you would also be wary of being knocked out early if you have a team solely composed of attacking players, but no defence if the tide were to turn. Drawing up a balanced investment portfolio relies on similar selection tactics as in order to achieve your investment goals you need to have not only defensively positioned managers in case of a market correction, but also those that will help you achieve the returns you desire.
Bestinvest’s Managing Director Jason Hollands, has assembled a dream team from all over the world, to create a world class squad for the longer-term investors.
The centre forwards of our team are all global star players, but each with their own distinctive styles. There are two developed market funds, Lindsell Train Global Equity and Artemis Global Income, but while the former typically backs larger well-known quality growth companies, the latter is more sensitive to valuations paid. In the centre is a striker fund focused on high growth developing markets.
Lindsell Train Global Equity
Michael Lindsell and Nick Train have a distinct investment style, taking large positions in a small number of high quality businesses, such as PayPal, Diageo and Nintendo, and hold them for the long-term. Given the quality and stability of these businesses this does not necessarily increase risk, and in fact their funds have typically offered a degree of protection in falling markets. Both portfolios and performance have little in common with the index and they have often lagged rising markets, but over time they have outperformed the market.
Fidelity Emerging Markets
Nick Price is an experienced emerging markets equities manager, having been running money in the space for more than a decade and running this fund since 2010. He is an accountant by background and scrutinises companies’ balance sheets rigorously. He favours companies with strong market positions and competitive advantages, as these are typically able to deliver attractive earnings throughout the economic cycle. Historically these companies have enabled the fund to deliver a more defensive performance profile, often providing a degree of protection in falling markets. He is unconstrained by any benchmark, instead focusing on company fundamentals and bottom-up stock selection to target high quality companies that he believes are capable of delivering sustainable returns over the medium term. Key holdings include Samsung, Glencore and Alibaba.
Artemis Global Income
Run by Jacob de Tusch-Lec, the fund has ‘go anywhere’, unconstrained approach to investing developed markets and currently has far less exposure to the expensive US stock-market than global funds which stay close to the Index. The fund also has a high weighting to medium-sized companies compared to its peer group, it has a dynamic investment approach meaning the manager is able to adjust the portfolio to suit all market conditions. The flexible approach allows the manager to achieve a balance of dividend growth and the potential for capital appreciation.
In the midfield we have four funds, each focused on major stock market region.
Dodge & Cox Worldwide US Stock Fund
Managed from San Francisco, this fund is dominated by major blue chip US companies, such as Microsoft, Wells Fargo and Twenty-First Century Fox. Identifying companies that the managers believe are undervalued is a key part of the approach, which we think is the right strategy at a time when overall US stock market valuations are expensive on a range of measures. The fund will not invest in utilities, biotechnology nor new media companies so will miss out when any of these sectors are in vogue but we expect this fund to prove defensive in tougher times. The managers have a close relationship with investee companies and their CEOs, with whom they actively engage to enact shareholder-beneficial changes.
Alexander Darwall is a high conviction manager with a distinct investment style who has built a formidable track record since taking over this fund in 2001. His portfolios have little in common with the benchmark, with Darwall instead focusing on identifying high quality European companies such as Deutsche Boerse, Novo Nordisk and RELX.
Baillie Gifford Japan
The fund aims to achieve sustainable capital growth through investment in large and midcap Japanese equities in any economic sector. The fund has a team-based approach but is led by Matthew Brett. They use a bottom-up, growth orientated style to invest in companies which have strong financials, a positive industry background, a competitive advantage in that industry and favourable attitudes towards shareholders, examples being Toyota, FANUC and Misumi.
Schroder Asian Alpha Plus
Manager Matthew Dobbs has an unconstrained mandate. He is supported by a sizeable team of analysts and other managers based in the region. The fund invests in a portfolio of 50-70 companies with a focus on those with positive cash flow, balance sheet strength and valuation support. The fund has an overweight exposure to China and Hong Kong; 30% to China, 20.5% to Hong Kong, and is underweight relative to the index to South Korea and Singapore; 13.7% to South Korea and 2.3% to Singapore.
Our Defence is where we have placed funds investing in UK listed companies - there is less currency risk, the UK is relatively inexpensive compared to other developed markets at the moment and the UK market remains a leader for dividends.
Manager Hugh Yarrow invests in a concentrated portfolio of mostly UK companies, as well as selected US and European large caps. His investment style, which focuses on "quality" asset-lite companies, typically provides a degree of resilience in falling markets The fund has a bias to sectors such as consumer goods and health care and avoids industries like mining which require heavy investment in assets such as plant and machinery.
Liontrust Special Situations
Managed by Julian Fosh and Anthony Cross, the fund has managed to achieve both significant and consistent outperformance over the long term, but with less volatility than the UK market. The fund follows a well-articulated process, called the Economic Advantage approach, that looks for companies able to sustain a higher than average level of profitability for longer than expected. The companies the fund invests in have distinct characteristics, like ownership of intellectual property, strong distribution channels or significant recurring revenue streams whether they are large, medium sized or smaller companies.
JO Hambro CM UK Equity Income
The investment process, which incorporates a strict yield requirement for portfolio holdings, was developed by fund managers James Lowen and Clive Beagles at previous employers Newton. Stock selection also incorporates long-term investment trends identified by the managers used to focus research. This disciplined approach, has delivered consistent outperformance.
In goal we have placed a targeted absolute return fund designed to deliver steady eddy returns but with low volatility. The approach is not going to lead to dazzling returns, but should help provide a degree of capital preservation in tougher times.
Invesco Perpetual Global Targeted Returns
The fund has 25-30 individual investment strategies running within it at any given time, which cover equities, bonds and currencies. The aim is positive returns in all market environments on a rolling basis, aiming for returns that are 5% above interest rates but with low capital volatility, although there are no guarantees. To achieve this, the investment team uses a wide number of investment techniques which are intended to provide small, incremental returns to generate the positive overall return with less than half the volatility of global equities.
Please note the value of investments can go down as well as up and you may get back less than you originally invested.
Past performance or any yields quoted should not be considered reliable indicators of future returns. This article does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers.
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