Skip to the content

The Share Centre adds Columbia Threadneedle and Neptune funds to preferred list

17 November 2017

FE Trustnet finds out why Threadneedle US Equity Income and Neptune Latin America have been added to The Share Centre’s Platinum 120.

By Gary Jackson,

Editor, FE Trustnet

The Share Centre has added funds for investors looking for equity income exposure to the world’s biggest economy and the long-term potential being offered by Latin America to its preferred list.

The platform has added the Threadneedle US Equity Income and Neptune Latin America funds to its Platinum 120 list, highlighting a number of benefits they could offer to different investors.

US equities have powered international markets forward for much of the period since the global financial crisis while Latin America is a key region in emerging markets, which are expected to witness significant growth in the coming decades.

In the article below, we take a closer look at the two funds and find out why The Share Centre has added them to the Platinum 120.

 

Threadneedle US Equity Income

Sheridan Admans, investment research manager at The Share Centre, said the £121.2m Threadneedle US Equity Income fund could be an appropriate option for investors seeking large and mid-cap equity income exposure from the US.

The US economy accounts for around 20 per cent of global output, making it the world’s largest economy by a significant margin. While the US economy is dominated by service-led businesses, it is also the world’s second-biggest manufacturer in the world, especially in fields such as automobiles, farm and industrial machinery, aerospace, chemicals and telecommunications.

Performance of fund vs sector and index over Grant

 

Source: FE Analytics

“The US economy, much like other developed market economies, has been recovering slowly from the stock market crash of 2008, said Admans.

“The recovery has involved the US Federal Reserve supporting growth and consumer indebtedness with ultra-low monetary policy, including setting the base rate near zero for almost a decade. These policies have supported significant improvement in the US jobs market and pushed up asset prices, and subsequently companies look in good health.”


He added: “Fund manager Nadia Grant aims to provide income with a preference for companies that are growing their distributions, which have the potential to grow the amount you invested.

“Many of the top 10 holdings within this portfolio at present are large multinational names who generally are familiar to us in our everyday lives such as Apple, Microsoft, Cisco, Pfizer and Johnson & Johnson. The fund has larger positions in consumer staples, energy and real estate, the latter is an area of which Grant has a solid background, which goes to support the higher index weighting in the fund.”

As the chart above shows, the fund has generated a 39.92 per cent total return since Grant took over in May 2016. This means it has narrowly underperformed its average IA North America peer and its S&P 500 benchmark.

Grant’s approach means that she will not buy a stock for the fund unless it is paying a dividend. However, she prioritises fundamental research, applying this first to narrow down the investable universe then using her income discipline to the companies that remain.

As part of her fundamental research, the manager considers factors such as a company’s ability to grow earnings, as well as looking for those with strong or improving cash flow generation, a disciplined management team and dividend growth prospects.

Threadneedle US Equity Income has an ongoing charges figure (OCF) of 0.89 per cent and is yielding 2.70 per cent.

 

Neptune Latin America

The second addition to The Share Centre’s Platinum 120 list is the £34.7m Neptune Latin America fund, which is managed by Thomas Smith. Admans says it could be an option for investors who are comfortable with volatility and want long-term exposure to the fast-growing region.

Performance of fund vs index over 5yrs

 

Source: FE Analytics

“Latin America is one of the most dynamic emerging markets but historical political challenges combined with subsequent economic woes have meant investors have naturally been wary of exploring opportunities within the region. We believe however, that things are turning around and therefore the longer-term outlook is improving,” he said.

“The Neptune Latin America fund provides investors with an opportunity to invest in a region with an exciting future; favourable demographics, a growing middle class, political reforms and a global dominance in the commodity sector.”

The fund currently has 54 per cent of its portfolio in Brazil with another 24.4 per cent in Mexico. Top holdings include Petrobras, Banco Bradesco, Vale, Itaú Unibanco and Itaúsa.


Admans also notes another interesting element of the portfolio’s positioning: “The fund has an off-benchmark position in Argentina, an economy which is currently a frontier market but likely to move to emerging market status in 2018, and which is currently demonstrative of many of the key positive trends at work in Latin America.”

The fund resides in the IA Specialist sector, which means that comparisons to its average peer are not appropriate. However, FE Analytics shows that it has outperformed its MSCI Emerging Markets Latin America benchmark over one, three and five years.

FE Analytics also shows that the fund has been less volatile and suffered a lower maximum drawdown than the index over the past five years.

Neptune Latin America has a 1.22 per cent OCF.

Editor's Picks

Loading...

Videos from BNY Mellon Investment Management

Loading...

Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.