Moneywise Fund Awards 2015: part 2
HIGHLY COMMENDED: Jupiter European Income Fund
While Europe has had no shortage of negative headlines this year on the back of sluggish economic growth, ultra-low inflation and indeed the whole ‘Grexit’ issue, investors are still piling in. Numbers from the trade body Investment Association show that since the start of the year to the end of September almost £2.6 billion has collectively been invested into Europe (ex-UK) funds. The exuberance is chiefly as a result of the European Central Bank’s ¤60 billion-a-month electronic money printing or quantitative easing (QE) programme, a strategy which helped secure robust market gains in both the UK and US.
Despite the continent’s fiscal woes, many fund managers are delivering consistently robust returns.
Taking top place once again is the Invesco Perpetual European Opportunities fund. Connolly says: “The fund benefits from the stock-picking skills of an experienced manager in Adrian Bignell. He identifies investment themes and then runs with them, in particular benefiting from finding turnaround recovery and undervalued companies.” Jupiter European Income takes the highly commended position this year.
ASIA PACIFIC (EX-JAPAN)
HIGHLY COMMENDED: Baillie Gifford Pacific Fund
Given the Asia Pacific (ex-Japan) sector’s proximity to emerging markets, it has been far from covered in glory this year with many funds enduring losses. However, a number of funds have shone through over the long term. First State Investments created a subsidiary business in early November to manage some of its funds and one of those is our category winner – the Stewart Investors Asia Pacific Leaders fund, run by investment veteran Angus Tulloch. It’s worth noting, however, that Tulloch is due to step down as manager by July 2016.
McDermott says: “The First State Stewart team has a strong process and an excellent boutique-style culture. When combined with the experience of Angus Tulloch and a skilled team with a presence throughout Asia, it is not surprising that this fund has generated exceptional performance.”
Taking second place is the Baillie Gifford Pacific fund, run by Roderick Snell. Connolly says: “The manager is not afraid to take risks, as evidenced by the fund currently being 86% invested in a combination of China, India, South Korea and Taiwan. But the strong performance of the fund makes up for the volatility.”
HIGHLY COMMENDED: Old Mutual North American Equity Fund
Even the mighty US could not shield itself from the heavy turbulence experienced by markets this year, with its benchmark blue-chip index down by some 3% since the start of 2015. Naturally, the North America fund sector echoed the index’s pain, with the typical fund off by a steeper 6% for the period. But as the world’s largest economy, it is hardly a region investors can, or will, ignore. In pole position this year is the Legg Mason ClearBridge US Large Cap Growth fund.
Haynes says: “Although ClearBridge may not be known to many UK investors, it is an American company that manages more than $100 billion. This fund has built up an impressive record through investing in a high-conviction portfolio of global leading US-based companies.”
Last year’s silver medal winner, Old Mutual North American Equity, managed by Ian Heslop, once again steps up to claim the commended position.
Lowcock says: “Heslop uses data and statistical analysis to identify opportunities, which was reviewed following the financial crisis to avoid value traps. There has been evidence the change in process has worked with the fund- performing better during volatile markets. The focus on technology and biotech will have helped performance over the past couple of years.”
MIXED INVESTMENT 20-60% SHARES
HIGHLY COMMENDED: Standard Life Investments Dynamic Distribution Fund
Mixed investment funds are one-stop shops for retail investors, typically offering access to a variety of asset classes all within a single portfolio. In this sector, the equity portion must account for between 20% to 60% of a fund’s assets. Kames Ethical Cautious Managed takes the top spot once again this year. This fund combines the strength of Kames’ UK equity and fixed- interest teams, and adopts a strict ethical criteria. Just over 50% of the fund is invested in shares, with some 41% in bonds and the remainder in cash. Connolly asserts that Audrey Ryan is well regarded in the ethical investment arena, while Ian Buckle “is a safe pair of hands to manage the fixed-interest exposure within the fund”. Connolly says: “This approach has worked well, although the comparative performance of ethical funds is heavily influenced by what they are not allowed to hold as well as what they invest in.”
Taking second place is Standard Life Investments Dynamic Distribution, which Lowcock describes as very much focused “on long-term growth through income and capital returns”. He adds: “Unlike other distribution funds where capital preservation and beating inflation is an important consideration, this fund is heavily invested in shares with exposure to bonds and other assets.”
Lower interest rates encourage people to spend, not save. But when interest rates can go no lower and there is a sharp drop in consumer and business spending, a central bank’s only option to stimulate demand is to pump money into the economy directly. This is quantitative easing. The Bank of England purchases assets (usually government bonds, or gilts) from private sector businesses such as insurance companies, banks and pension funds financed by new money the Bank creates electronically (it doesn’t physically print the banknotes). The sellers use the money to switch into other assets, such as shares or corporate bonds or else use it to lend to consumers and businesses, which pushes up demand and stimulates the economy.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
Generic, loosely-defined term for markets in a newly industrialised or Third World country that is in the process of moving from a closed economy to an open market economy while building accountability within the system. The World Bank recognises 28 countries as emerging markets, including Argentina, Brazil, China, Czech Republic, Egypt, India, Israel, Morocco, Russia and Venezuela. Because these countries carry additional political, economic and currency risks, investors in emerging markets should accept volatile returns. There is potential to make large profit at the risk of large losses.
A standard by which something is measured, usually the performance of investment funds against a specified index, such as the FTSE All-Share. Active fund managers look to outperform their benchmark index. Cautious fund managers aim to hold roughly the same proportion of each constituent as the benchmark, while a manager who deviates away from investing in the benchmark index’s constituents has a better chance of outperforming (or underperforming) the index.