Moneywise Fund Awards 2015: part 3
MIXED INVESTMENT 40-85% SHARES
WINNER: Consistent Practical Investment
HIGHLY COMMENDED: MFM Hathaway
The Mixed Investment 40-85% Shares sector tends to suit more intrepid investors looking for exposure to multiple asset classes. In the case of these portfolios, stocks must account for between 40% and 85% of a fund’s assets. T
his year’s winner, which was last year’s runner-up, is Consistent Practical Investment. As its names suggests, the vehicle aims to deliver consistent long-term capital and income growth. “This is a fund that invests in a portfolio of investment trusts, investing across all asset classes but primarily in stockmarket-based investments,” says Haynes.
Taking second place is MFM Hathaway. “The fund looks for long-term growth with an emphasis on a decent immediate yield,” says Lowcock.
Haynes adds: “This fund provides exposure to a mix of UK shares and bonds with a benchmark 70/30 split. It has provided investors with strong, risk-adjusted returns and provides a good balanced proposition.”
WINNER: Schroder Global Healthcare Fund
The Global sector can be misleading, as while funds in the category must have at least 80% of their holdings in international stocks, many vehicles have particular industry biases. This year’s winner, the Schroder Global Healthcare fund, which has more than 60% of its assets in the pharmaceutical and biotechnology industries, is a case in point. Commenting on the vehicle, which also took the top spot last year, Lowcock says: “It has been a beneficiary of rising stock prices and merger and acquisition (M&A) activity, which has been going on in this space. As a result of its focus, the fund tends to invest primarily in the US and then Europe.”
In second place is Henderson Global Growth. Haynes says: “Fund manager Ian Warmerdam has generated strong returns from a focused portfolio of companies that have potential to generate sustainably high levels of growth. It has a remit to invest across the globe and has benefited from high exposure to US companies.”
GLOBAL EMERGING MARKETS
HIGHLY COMMENDED: Invesco Perpetual Global Emerging Markets Fund
There is no getting away from the fact that emerging markets have been enduring a torrid time, underperforming developed markets for a number of years. While these funds are for the more adventurous investor and should typically only take up a small part of a balanced portfolio, there are a number of top players in the sector.
This year’s winner is Aberdeen Global Emerging Markets Smaller Companies. Aberdeen remains one of the most respected emerging markets fund managers, and Connolly says: “Investing in a smaller companies fund is high risk, although it should be well positioned to benefit from the expected long-term upturn in domestic consumption in the emerging markets.”
Taking second place is Invesco Perpetual Global Emerging Markets. Lowcock says: “The fund has been heavily invested in financials and technology stocks and is well diversified, investing in small companies through to large.”
HIGHLY COMMENDED: F&C Responsible UK Income Fund
The ethical investment sector has enjoyed some progress in recent years, bolstered by a change in sentiment towards the likes of climate change and human rights. Ethical investment research hub Eiris highlights that there are now almost 100 green and ethical funds available to UK investors, up from just a couple of dozen 10 years ago. FE Analytics this year launched its inaugural recommended ethical funds list.
From that selection, the 2015 ethical fund winner is the Henderson Global Care UK Income fund. Haynes says: “it focuses on companies that have positive ethical and environmental screening. Despite this leading to some restrictions on where it can invest, performance has been impressive both in terms of growth and income generated.”
Taking the highly commended slot is F&C Responsible UK Income. The group is one of the market leaders in the space, having launched the first ethical fund in Europe more than 30 years ago. Connolly says: “This fund benefits from a very experienced manager in Catherine Stanley and an established investment team, which produces consistent results.”
The general term for the rate of income from an investment expressed as an annual percentage and based on its current market value. For example, if a corporate bond or gilt originally sold at £100 par value with a coupon of 10% is bought for £100 then the coupon and the yield are the same at 10%, or £10. But if an investor buys the bond for £125, its coupon is still 10% (or £10) and the investor receives £10 but as the investor bought the bond for £125 (not £100) the yield on the investment is 8%.
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.
An individual employed by an institution to manage an investment fund (unit trust, investment trust, pension fund or hedge fund) to meet pre-determined objectives (usually to generate capital growth or maximise income) in prescribed geographic areas or investment sectors (such as UK smaller companies, technology or commodities). The manager also carries the responsibility for general fund supervision, as well as monitoring the daily trading activity and also developing investment strategies to manage the risk profile of the fund.