Jason Hollands, Managing Director at Tilney Bestinvest comments on the funds that proved most popular with clients using Tilney Bestinvest’s Online Investment Service in October.
1. Stewart Investors Asia Pacific Leaders (First State Investments)
“This fund, which has recently been rebranded as Stewart Investors Asian Pacific Leaders, has long been one of our top rated funds. The fund has held up incredibly well during a very volatile period for Asian markets in 2015, a vindication of its relatively conservative style and focus on high quality companies. The fund has been very cautious towards China, which has seen a marked slowdown in economic growth, but heavily weighted to India which is undergoing a reform programme. The fact that this fund proved the most popular fund amongst our clients in October suggests many believe Asian markets continue to offer bargains after such a torrid run.
"First State Investments has also recently announced that the fund’s long standing lead manager, Angus Tulloch, will hand over the reins next summer to co-manager David Gait, while remaining a member of the team. Given the team approach and David Gait’s strong track record, this is a fund we remain confident in and we have reaffirmed our rating.”
2. CF Woodford Equity Income
“The Woodford Equity Income fund has consistently been one of the most popular funds with our clients since it launched in 2014. The fund has rapidly ballooned in size to become the biggest in the sector.
“Investors who already have significant exposure to larger company weighted UK equity income funds might consider dovetailing these with funds which have a greater emphasis on medium and smaller sized businesses such as the Standard Life UK Equity Income Unconstrained fund or the Unicorn UK Income fund, both of which are also rated by our research team.”
3. Standard Life Global Absolute Return Strategies (GARS)
“This is the market leading multi-strategy fund in the Targeted Absolute Return sector. Under a single umbrella it provides investors with exposure to around 30 underlying, distinct strategies covering equities, bonds, currencies and interest rates. The fund seeks to deliver positive returns over the medium term at low levels of volatility. Risk is tightly controlled but, like any investment, Targeted Absolute Return funds do not guarantee a positive return."
4. Henderson UK Property
“The Henderson UK Property fund invests in high-quality commercial properties with strong tenants on long leases. It has a strong bias to South East England and London. Around 31% of the property is exposure to retail outlets, 28% office blocks and 15% industrial properties. Its top holdings include 440 The Strand, the home of Coutts Bank, and a Travelodge in King’s Cross, London. Investors considering this fund should note that as physical properties are illiquid assets, the fund also holds considerable exposure to liquid assets including cash and property-related shares to meet potential outflows.”
5. Threadneedle European Select Fund
“Europe is currently one of our preferred equity markets and expectations have recently been growing that the European Central Bank may accelerate its stimulus programme. The Threadneedle European Select fund has long held a five star rating from our research team for exposure to European equities. The fund is tilted towards blue-chip, large-cap stocks with strong brands and resilient earnings. Holdings include well-known companies such as cosmetics group L’Oreal and Anglo-Dutch consumer giant Unilever. It is also heavily weighted towards the healthcare sector (23.7%).
6. Threadneedle UK Equity Income
“UK equity income funds have proved incredibly popular with investors over the last year, with the Woodford Equity Income fund dominating inflows into the sector. Yet there are other very strong funds in the sector, including the five-star rated Threadneedle UK Equity Income fund. The fund has a very pragmatic approach, identifying companies for their growth potential as well as their ability to sustain and grow their dividends.”
7. FP Argonaut Absolute Return
“This is the second absolute return fund to feature on this month’s list, highlighting strong demand for funds that aim to generate positive returns across all market environments at a time when the market outlook has become more uncertain. However, as with any investment there are no guarantees. The approach on this fund though is a "long/ short" strategy of investing in companies the manager Barry Norris believes will positively surprise the market with earnings growth, while also taking negative positions on companies he believes will disappoint.”
8. Vanguard LifeStrategy 80% Equity
“This fund provides exposure to a portfolio of low-cost index trackers funds, with 80% exposure to equity markets and 20% in fixed income.”
9. Artemis Global Income
“This fund, managed by Jacob de Tush-Lec, has an unconstrained approach to investing in global equities, encumbered from shadowing an index. This means its top holdings are typically very different from competitor funds, which usually hold very large US based companies. Instead, this fund's top holdings include the likes of Israeli telecom group Bezeq, the Portuguese postal service CTT Correios de Portugal and Danish shipping firm DFDS Copenhagen."
10. Liontrust Special Situations
“The Liontrust Special Situations fund is currently celebrating its 10 year anniversary, and investors should be rightly toasting its success as it has significantly outperformed, with a high degree of consistency, and proven very defensive in tougher times.
The fund is managed with a distinct investment philosophy, which the managers Anthony Cross and Julian Fosh call the ‘Economic Advantage’ approach. This involves finding quality growth companies that own an intangible asset – such as intellectual property, a strong brand or distribution network, with high exposure to recurring rather than transactional earnings – and then holding the business for the long term. The team believes businesses with these characteristics are highly resilient through the economic cycle and are difficult for competitors to replicate. Importantly the fund seeks out such companies whether they happen to be large, medium-sized or small. Additional criteria that the fund managers apply when looking at smaller companies is that they will only invest where the management teams own at least 3% of the company as they believe this aligns managers with investors. They seek to avoid businesses taking excessive risks, including those that make serial acquisitions.”
At a glance: The most popular funds selected by clients using Tilney Bestinvest’s Online Investment Service in October 2015:
Find out more about how we rate funds here: /investment-research/our-research-approach