Andy Parsons, head of investment research at The Share Centre, explains why these six funds have been added to the Platinum 120 and what they offer investors.
Henderson Global Technology
Investors have been reluctant to expose themselves to technology since the burst of the tech bubble. However it is growing in importance in our everyday lives which is why we have added the Henderson Global Technology fund to the Platinum 120
The Henderson Global Technology fund, co-managed by Stuart O’Gorman and Ian Warmerdam, looks at the drivers of technology demand and seeks to grow returns from them. The managers seek to identify and invest in companies that have clear growth themes, such as online advertising, connectivity, data growth, paperless payment and ecommerce. In terms of market cap spectrum, the fund will have a bias towards large cap holdings and focus on those companies with a perceived undervalued growth opportunity.
The fund benefits from a shift in demographics that are helping to drive technological adoption. In some developing countries, demand for mobile phones is far greater than that of land lines. It is also placed to benefit from changes in consumer behaviour as online shopping continues to grow and technology companies take advantage of this.
Artemis Global Energy
Energy and in particular fossil fuels are a major part of our lives and as global populations expand and countries develop, demand will increase while cheap and easily extractable sources deplete.
Over the past couple of years, energy prices have generally risen strongly, helping boost the profits of many companies. In addition, the increasing demand for energy from the BRIC countries and what is generally perceived as the fixed supply of energy has also put upward pressure on energy costs.
The Artemis Global Energy fund is co-managed by John Dodd and Richard Hulf with the aim of identifying those companies engaged in the oil and gas sector, energy generation and transmission that have the potential to generate long term capital growth. Alongside these, they may also invest in companies that seek to develop and exploit new energy technologies.Although the fund was only launched in April 2011, and therefore has a very short performance history, we believe it may be suitable for those investors wishing to seek direct and specific exposure to the continual energy story.
Standard Life Global Smaller Companies
For many investors exposure to smaller companies is often confined to a traditional UK fund, aiming to combine and blend large caps with a few small to mid-cap stocks. However, there are a growing number of investment opportunities that offer investors flexibility and a truly global reach, as they seek to identify the very best smaller company opportunities from around the world. The Standard Life Global Smaller Companies fund falls into this category.
The fund is co-managed by the highly respected and much acclaimed Harry Nimmo and his colleague Alan Rowsell. It was launched in January 2012 to allow the effective strategy and proven investment process Harry has run on the UK Smaller Companies fund to be taken to a wider portfolio of investment opportunities.
This fund may be suitable for investors seeking global diversification across regions and market cap, albeit appreciating the added risk and volatility small cap companies generally exhibit.
We have long held the belief that India has all the potential to become a major economic powerhouse however it continues to be beset with numerous issues and has underperformed over the past couple of years.
Although the pace of development remains slow, the region is evolving given the demographic appeal. Infrastructure remains a key element of the region’s future and whilst improvements have been made, there is considerable and significant development still required.
The Jupiter India fund is managed by Avinash Vazirani, who identifies companies from a bottom up perspective, principally based on a Growth at a Reasonable Price measure. However if an opportunity exists, he will be prepared to pay a premium if the earnings growth compensates for this.
This fund may be suitable for higher risk investors who can appreciate the economic opportunity this region affords, and who are prepared to be patient.
SWIP UK Flexible Strategy
The SWIP UK Flexible Strategy fund is managed by the highly talented James Clunie and will often not appear in many searches investors run on absolute style investment approaches as it sits in the ‘specialist’ sector.
Many funds that look to generate returns in all forms of market conditions have failed to deliver on these statements. Whilst it is fully appreciated that these types of funds are often left behind in very positive market sentiment, they do serve a purpose in a well-diversified portfolio where an investor is looking to help limit potential downside risk.
This fund’s identification of potential short positions is driven initially by SWIP’s fundamental research process, which estimates a fair value for a stock. From this position, SWIP’s stock lending data screens identify the risks and catalysts. James will then look to short the stocks he believes are overpriced and where there is a catalyst and where there is limited short selling.
For those investors seeking an investment opportunity which allows the fund manager true flexibility in his investment decisions and with the ability to short a company where concerns arise over valuations and business risks, then this fund may well be suitable.
Schroder Small Cap Discovery
The Schroder Small Cap Discovery fund has a predominant focus on smaller sized companies from the Asian region along with selected Emerging Markets. The fund is managed by the highly successful and well respected Matthew Dobbs who also manages the Schroder Asian Alpha Plus and Asia Pacific funds.
Unlike many other smaller cap style investment mandates, this fund is managed on a fairly concentrated basis with the total number of holdings currently being around 78.
Whilst there are a number of country specific smaller company funds available, investors need to be aware that such investments naturally increase their overall portfolio volatility and exposure to issues such as currency fluctuation and specific geographical concentration. However, for those feeling slightly more adventurous it can often lead to directly holding a fund specifically targeting the small to mid-cap arena.