Following the inauguration of Donald Trump, Andy Parsons, head of investments at The Share Centre, believes three funds could reward investors over the long term regardless of the President Elect’s time in office.
The three funds that he has picked out are:
- CF Miton US Opportunities, which specialises in stock picking among medium and smaller US companies.
- AXA Framlington Health, which aims for capital growth through investment in healthcare and medical services and product companies worldwide.
- First State Global Listed Infrastructure, which Moneywise’s columnist Darius McDermott also selected as one of his niche funds to weather 2017’s potentially stormy markets.
Moneywise believes that these all look like good fund options to consider adding to an established investment portfolio. However, if you are starting out then you should look at our First 50 Funds list and suggested income and growth portfolios first.
We delve into the detail of Mr Parson's three recommended actively managed funds below.
CF Miton US Opportunities fund
This fund aims to achieve long-term total returns by investing primarily in a portfolio of North American equities which the managers believe will give investors the greatest opportunity to benefit from the recovery in the US economy.
- 2016: 37%
- 2015: 8%
- 2014: 15%
Ongoing charge: 0.85%
Mr Parsons says: “In a roundtable event we hosted about the upcoming political event in October, Nick Ford one of the fund’s managers said that they had already invested in companies that they hoped would benefit from a strong economic environment.
“Taking a longer-term view, the managers principally use a bottom-up investment approach, identifying companies with a competitive advantage in products or services. Investors should appreciate that their belief that companies with regular and growing cash flow are more likely to deliver attractive returns than immature businesses looking to develop new products or relying on one off events, puts them in a safe position for the future.”
The fund seeks to provide long-term capital growth by investing in listed healthcare companies of any size which can be based anywhere in the world, albeit there will be a natural weighting towards the US given the region’s prominence to these type of businesses. As at 31 December 2016, three quarters of the portfolio is invested in the US.
- 2016: 7%
- 2015: 12%
- 2014: 30%
Ongoing charge: 0.83%
Mr Parsons says: “The topic of healthcare was in the spotlight through the Presidential campaign, with Donald Trump supporting a funding increase for the National Institutes of Health and a reform of mental health programmes.
“It is inevitable that the Pharmaceutical and Biotech sectors will remain under pressure over the next few years which is important to note given that the sector is one of much interest to investors as it provides them with both growth and income opportunities.
Nevertheless, this fund’s manager Dani Saurymper has said this week that he remains confident on the outlook for the healthcare sector and despite the recent and potentially ongoing turmoil, he believes the ‘long-term growth drivers of the sector remain intact’. Subsequently, we believe this fund is a sensible long-term investment opportunity.”
First State Global Listed Infrastructure fund
Infrastructure is perceived by many as being defensive, with mature businesses offering a steady and reliable level of income which can often have inflationary pricing linked in. This fund seeks investment opportunities from around the world, but it’s important to note that as at 31 December 2016, half of its portfolio (48%) is invested in the US.
- 2016: 35%
- 2015: 0%
- 2014: 18%
Ongoing charge: 0.83%
Mr Parsons says: “Our view is that most developed economies have significantly under invested in their infrastructure. To remain competitive, economies such as the US, have to invest to update their infrastructure to enable more reliable, efficient strategic assets like road, rail, sea ports, gas, electric and water utilities.
“Due to such underinvestment in infrastructure, the fund’s manager, Peter Meany, believes that the investment story in the sector still has about 15 to 20 years to run. He believes the global listed infrastructure market stands at around $2 trillion in size and is likely to grow over time, as governments float more assets onto the market. As a result, we would suggest that a fund such as this wouldn’t be a bad option for longer term investors.”