High-profile, large investment trust launches have a nasty habit of not ending well for eager private investors in thrall to the cult of a ‘star manager’ or attracted to an investment story that turns out to be less exciting than first thought.
The stars are aligning – but the pattern forming does not look propitious for developed market equities, particularly the US after its blistering run over the past decade. Meanwhile, long-suffering investors in emerging markets, relative to global developed markets, are set to have their faith repaid.
It is perhaps not surprising to see several funds and trusts managed by Baillie Gifford included among the Rated Fund laggards over the three months to 30 September.
The Edinburgh-based investment partnership makes no bones about its liking for innovative companies – quoted and unquoted – that it believes can deliver sustainable growth in profits for years to come, and it is prepared to hold such companies through periods of market stress.
Only one fund broke the 10% return barrier in the volatile third quarter to end-September. Following its top-spot showing in the first half of the year, LF Ruffer Gold was again the top performing fund with a 13.9% uplift. The fund invests in a 62-strong portfolio of gold and other precious metal-mining companies around the world.
The concept of easy money has resonated throughout Money Observer’s 40-year history. First came the virtual guarantee of immediate share price gains from mass privatisations in the 1980s; then came the windfalls from building society demutualisations as the decade turned; and then the spoils from dotcom fever in the late 1990s, when any company that came to market could raise capital, burn through it and make its stockmarket backers rich, albeit fleetingly.
The asset manager for a changing world” seems a fitting description of BNP Paribas Asset Management, following its recent research paper on renewable energy versus oil. In ‘The death toll for petrol’, Mark Lewis, the investment bank’s global head of sustainability research, sets out a compelling case for long-term investment in renewable energy for transportation, when assessed in terms of the energy return on capital invested – shortened to EROCI.
Most Money Observer readers will be familiar with the table-topping exploits of Terry Smith’s global Fundsmith Equity fund, but perhaps less so with the sustainable version. Fundsmith Sustainable Equity got off to a comparatively slow start when it launched on 1 November 2017, but it has recently mirrored the performance of its much larger sister fund.
In the six months since our Rated Funds were introduced at the end of January, 14 out of the 267 passive and actively managed funds, investment trusts and exchange traded funds have lost money.
Stunning returns have been made by a large cohort of Money Observer’s Rated Funds since we revealed the 2019 members at the end of January.
Our specialist gold selection tops the performance charts (see below), but in a period when markets at large regained their mojo after the bitter disappointments of 2018, it is group of overtly equity growth-oriented US and global selections that have made the most money for investors – with gains of 20% or more recorded by 28 Rated Funds.