FP CRUX UK Special Situations, Baillie Gifford Japanese Income Growth and RWC Continental European are among five recently launched funds worth considering in 2019, according to FundCalibre’s Ryan Lightfoot-Brown.
After a troubling year for markets in which just a handful of funds from the Investment Association universe managed to deliver a positive return, many investors have been left considering their next move amid heightened volatility.
As the below chart shows, the FTSE All Share was down by 9.41 per cent in 2018, while the MSCI World dropped by 3.04 per cent and the S&P 500 suffered its worst year since 2008 with a 0.96 per cent return (in sterling terms).
Performance of indices in 2018
Source: FE Analytics
As such, FundCalibre’s Lightfoot-Brown said the new year represents a fresh start for many investors and time to consider new investment opportunities, highlighting five recently-launched funds that investors may wish to take a look at in 2019. Below FE Trustnet takes a closer look at these recommendations.
Baillie Gifford Japanese Income Growth
First up is the £561.7m Baillie Gifford Japanese Income Growth fund, managed by Matthew Brett and Karen See. It is the most recent addition to Baillie Gifford’s range of Japanese equity funds.
“Launched just 18 months ago, it aims to take advantage of the improving corporate governance we are seeing in Japan,” said the FundCalibre analyst.
“One of the big changes to occur in recent years it that more and more Japanese businesses are moving towards a progressive dividend-paying policy and this fund taps into this theme: a new corporate governance code, coupled with a large cash pile on Japanese balance sheets is a big opportunity for income-seeking investors. “
With a focus on dividend growth, the fund follows the same philosophy and process used across Baillie Gifford’s Japanese equity range.
The particular focus for this fund is on companies from across the market capitalisation spectrum with improving returns on capital and balance sheet efficiency.
Launched in 2016, the fund has made a 31.5 per cent total return compared with a 24.86 per cent gain for the benchmark TSE Topix index and a 23.04 per cent for the average IA Japan peer.
Baillie Gifford Japanese Income Growth has an ongoing charges figure (OCF) of 0.63 per cent and a yield of 2.16 per cent.
FP CRUX UK Special Situations
The next fund worth considering, according to Lightfoot-Brown, is FP CRUX UK Special Situations.
The fund – which has a small- and mid-cap bias – was launched last year and is managed by veteran UK equity investor Richard Penny.
“While the fund is new, the manager (who we have known for many years), style and process all have a good long-term track record,” said the FundCalibre analyst. “The manager likes to find a bargain, and over his career, has proven himself very able to do so.
“Having moved from a big company to a small boutique, this first year will be an important one for the manager to prove himself to potential investors.”
Since launching in October last year, the fund has made a loss of 7.16 per cent, compared with a fall of 8.09 per cent for the FTSE All Share index and 9.82 per cent loss for the average IA UK All Companies peer.
FP CRUX UK Special Situations has an OCF of 0.93 per cent.
LF Gresham House UK Multi Cap Income
The FundCalibre analyst said LF Gresham House UK Multi Cap Income is another equity income-focused strategy that could perform well this year.
“With the UK stock market yielding close to 5 per cent, we think UK equity income funds could do well this year,” said Lightfoot-Brown. “This particular fund has a bias towards smaller companies but can invest in businesses of any size.”
The fund’s manager Ken Wotton, who holds FE Alpha Manager status, targets a yield of 4 per cent with the aim of growing the dividend over time.
“It is very early days, but the fund held up extremely well when markets fell at the end of 2018 and, since launch, is up 7 per cent compared with a sector average loss of more than 4 per cent,” said the analyst.
Performance of fund since launch
Source: FE Analytics
Indeed, the fund is up by 7.69 per cent since launch at the end of June 2016, compared with a loss of 4.15 per cent for the average IA UK Equity Income fund.
The £33m LF Gresham House UK Multi Cap Income fund has a yield of 4.83 per cent and an OCF of 0.98 per cent.
RWC Continental European
The third fund tipped by FundCalibre is RWC Continental European, overseen by experienced investor Graham Clapp and launched in December 2017.
“Despite his experience and impressive track record, Graham has remained somewhat under the radar for many UK investors,” said the analyst.
“This could all start to change this year: after 30 years and more than 15,000 discussions with companies about their prospects, he is finding the opportunities to invest are better than ever.”
Since launch, RWC Continental European has lost 9.65 per cent, faring better than the average IA Europe Excluding UK fund, which is down by 12.05 per cent.
The €42.6m fund has an OCF of 1.1 per cent.
VT Gravis UK Infrastructure Income
Lastly, and with a slightly longer track record than the others, is the VT Gravis UK Infrastructure Income fund.
The £288.2m fund invest in a range of UK-listed infrastructure assets and targets a 5 per cent annual yield, with a focus on capital preservation though market cycles and protection from inflation.
“This more specialist fund marks its third anniversary at the end of January and we've liked it since its launch,” said Lightfoot-Brown. “It invests mainly in investment trusts exposed to different types of UK infrastructure; from railways and roads to GP surgeries and solar power.”
The analyst added that its yield 5.7 per cent and offers “an excellent way to invest in the growing need for infrastructure in the UK”, while providing some protection against rising inflation. He also likes the fact that it can invest in infrastructure debt in addition to equities.
Performance of fund vs index since launch
Source: FE Analytics
Since launch in February 2016, VT Gravis UK Infrastructure Income has generated a total return of 19.91 per cent compared with a 30.97 per cent rise for the MSCI United Kingdom index. It has a yield of 5.49 per cent and an OCF of 0.75 per cent.