Portfolios offering exposure to global value as well as US and European equities are among the funds run by boutique asset management houses that Bestinvest has just added to its buy list.
Last week, we looked that the boutique equity income funds that the platform is backing. The likes of TB Evenlode Income, Trojan Income, LF Morant Wright Nippon Yield and MI Somerset Emerging Markets Dividend Growth were featured.
Below, FE Trustnet examines four more boutique funds being tipped by Bestinvest – this time, those with a focus on capital growth.
Starting with the IA Global sector, Bestinvest has added Louise Keeling’s $245.2m RWC Global Horizon fund to its buy list.
Performance of fund vs sector and index since launch
Source: FE Analytics
Boutique RWC Partners runs a number of other strategies, covering areas such as emerging and frontier market equities, convertible bonds and UK equity income. Like the other equity funds managed by the firm, RWC Global Horizon takes a value approach to investing.
Keeling joined RWC in April 2013 to establish its long-only global equity team. Since launch in November 2013, RWC Global Horizon has generated a 65 per cent total return and outperformed both is average peer in the IA Global sector and its MSCI AC World benchmark.
The process behind the portfolio pays little attention to the benchmark and focuses on the capital cycle, which the manager believes can help identify companies that are trading at a fraction of its intrinsic value. It is currently overweight in the transportation, materials and food & staples retailing sectors, while being underweight pharmaceuticals, energy and tobacco.
RWC Global Horizon has an ongoing charges figure (OCF) of 1.15 per cent.
Turning to the US equity space and the first of two boutique funds to make it onto Bestinvest’s buy list is Dodge & Cox US Stock. With assets under management of $1.7bn, the fund is hardly a minnow but San Francisco-based Dodge & Cox is relatively unknown in the UK.
The firm prides itself on its long-serving staff as its recruitment model is to hire new recruits from business school and try to keep them for their entire working career. For its nine-person investment committee, for example, the average time spent at Dodge & Cox is 24 years.
“The equivalent US-based fund to this one started in 1965 and now totals £40bn, invested in just 61 stocks. The portfolio is dominated by large-caps, which means it is defensive but will miss out on small-cap rallies,” Bestinvest said.
“The fund does not invest in utilities, biotech or new tech, and the slow and steady management style means it may miss out in times when a sharp style rotation would otherwise benefit performance.”
The platform added that the fund could be appealing option for investors who want exposure to the US large-cap value style, a concentrated portfolio approach and active engagement with investee companies.
Dodge & Cox US Stock has a 0.63 per cent OCF.
Performance of funds vs sector and index over 5yrs
Source: FE Analytics
A second US offering by a boutique fund house has made it onto the list: Loomis Sayles US Equity Leaders. The manager of this fund – Aziz Hamzaogullari – holds FE Alpha Manager status and works for Boston-based Loomis Sayles, one of the boutiques owned by Natixis.
Bestinvest said the seven-person team running the portfolio carries out its own extensive stock research, which includes a rigorous in-house peer review process. “Companies that pass the strict quality and growth requirements are added to the ‘bench’ of stocks to watch until the price is right – for example, where valuation is compelling,” it explained.
“Unlike many others, a company’s price to earnings ratio is not a metric that appears in the team’s investment lexicon. Instead, the team prefers to look at barriers to entry, profit margin, top-line revenue growth, free cashflow and return on invested capital.”
The platform added that it likes what this process results in: a concentrated 35-stock portfolio of high-quality, high-growth stocks which trade at a discount to intrinsic value combined with low portfolio turnover and a significant difference from the benchmark US index.
Investors seeking a fund to provide exposure to US large-caps that are displaying persistent growth, a portfolio that is backed by a “diligent” research process and relatively few changes in holdings could consider this product, it added.
Loomis Sayles US Equity Leaders has a 1 per cent OCF.
The final boutique equity fund highlighted by Bestinvest is FP Crux European Special Situations, which is headed up by FE Alpha Manager Richard Pease and co-manager James Milne.
Pease formed CRUX in 2015 but have already established a strong track record at Jupiter in the 1990s, New Star in the 2000s and Janus Henderson from 2009. When he left Janus Henderson, his contract allowed him to bring this fund with him, giving his new firm a head start.
Performance of fund vs sector and index since launch
Source: FE Analytics
“This is a rare opportunity to access such a high-calibre fund manager without the high assets that so often hamper successful names in the industry,” Bestinvest said.
Pease’s approach is to look for companies that have the ability to weather economic cycles and sustain high returns over time, but can still be bought on attractive valuations. He also invests across the market cap spectrum, owning a core of well-known large-caps but holding smaller companies for their growth potential.
Bestinvest said this could be an appropriate choice for investors who want multi-cap exposure to the European market, a manager with decades of successful experience and a boutique firm that has a stable team.
FP Crux European Special Situations has an OCF of 0.89 per cent and is yielding 2.02 per cent.