Rated specialist sector funds
14th June 2013 15:37
by Helen Pridham from interactive investor
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Investing in a specialist area through a trust or fund is still a better option for most investors than buying individual shares. It means your risk is spread across, say, 50 or more companies. It also means you are getting the services of a specialist investment professional.
Nevertheless, even the best investment managers cannot escape market forces, and with many specialist funds investors will have to be prepared for volatility.
Click each chart on the right-hand side for an expanded version.
To find out more about the methodology, read:How Money Observer's Rated Funds were chosen.
Winner: Best larger fund, Absolute Return
Absolute return funds aim to deliver positive returns every year rather than trying to outperform a stockmarket index. But this outcome is easier said than done. The £500 million CF Odey UK Absolute Return fund, which scooped Money Observer's 2013 Fund Award in this category, has an almost faultless record over the past three years.
Based on figures analysing returns over every 12-month period within the past three years produced by Lipper, Odey UK Absolute Return has produced positive returns on all but one occasion.
Manager James Hanbury says the fund's success has been down to the choice of stocks, in which he is helped by the group's in-house analysts.
Winner: Best smaller fund, Absolute Return
The £43 million Marlborough Defensive fund has managed to achieve a positive return in each and every 12-month period over the past three years according to Lipper, as well as fulfilling our other criteria, resulting in its crowning as the leading fund in its category.
It is run by the Marlborough fund of funds team, led by Nicholas Cooling. Each member of the team contributes ideas and performs technical and quantitative analysis and modelling in relation to potential holdings. The objective is to construct a low-volatility, diverse, defensive portfolio of predominantly UK assets that is uncorrelated with the stockmarket and designed to achieve the maximum possible returns in excess of a cash account, but with the minimum risk of a capital loss.
An Editor's Choice, this fund's aim is to provide long-term capital appreciation by investing in companies involved in biotechnology, genomic and medical research globally, although in practice most of its holdings are US-based, reflecting the concentration of the industry in that part of the world.
It is one of the only funds that specialises in an area for which there is a good long-term investment argument, with an ageing population driving healthcare spending higher.
This trust is an Editor's Choice and is a geared play on a sustained recovery in financial assets. It is a relatively new Dublin-based fund that was launched just over two years ago. It invests in companies engaged in money management services around the world, including asset managers, investment advisers and wealth managers, stock exchanges and other service providers.
The fund managers are Tim Guinness and Will Riley.
An Editor's Choice, this fund invests primarily in the shares of gold mining companies, but up to a third of the portfolio may also be invested in companies mining for other minerals and metals. It is managed by Daniel Sacks and Bradley George, who are both members of Investec's broader natural resources team. They are very much company-focused and invest in those where they expect share price upgrades.
They favour small companies already in production, which tend to be consolidation targets and can also produce earnings surprises. The portfolio is concentrated with around 20-40 shares. Around half of the fund is currently invested in Canadian-listed gold miners.