New year, new choices? Adrian Lowcock shares five options for investors to consider.
As 2019 gets under way, investors are a lot less confident than they were a year ago, with global growth set to weaken over the next 12 months. Adrian Lowcock, head of personal investing at Willis Owen, looks at five funds to help investors through the year.
Man GLG Japan Core Alpha: Stephen Harker is a contrarian investor, looking for companies that are out of favour with investors. Focusing on the largest 300-listed companies in Japan, Harker seeks those companies that appear to be undervalued when compared with rivals. He uses valuation measures including price to book, dividend yield and price/earnings ratio to assess companies. He selects those with strong fundamentals and managers and that offer the potential for turnarounds. Harker uses a rigorous, repeatable process that draws on his team’s extensive knowledge of the Japanese market. With his clear focus on value, a long-term investment horizon and disregard for the benchmark, the portfolio differs significantly versus the stockmarket index.
Lazard Emerging Markets: James Donald’s insights are a key advantage for this fund. The team taps into Lazard's deep pool of analytical resources, helping it to form views on different companies and industries. Each team member spends more than eight weeks meeting company managements and local experts. The focus is on firms with improving financial productivity, which has been overlooked by the market. An initial screen uses a range of valuation metrics to filter the universe. The analysts then conduct detailed research to understand the drivers of a company's profitability. They pay particular attention to cash flow and its impact on the balance sheet and shareholder value.
Investec UK Alpha: Simon Brazier blends fundamental company research with economic analysis and believes that a clear understanding of the thematic background is essential. Brazier then meets company managers, which he sees as key to his approach. His assessment of management’s track record, strategy, and allocation of free cash flow are vital parts of the research framework, alongside a valuation analysis that considers both the upside potential and downside risk of any investment. The manager’s approach is flexible and pragmatic and he constantly seeks to balance out the risk/reward opportunities, not only at the individual stock level but, more importantly, at an overall fund level.
JP Morgan Global Macro: The team believes that global social and economic trends are the main drivers of returns for asset classes and they look to identify and exploit these with the aim of delivering positive returns in all conditions while prioritising capital preservation. James Elliot and Shrenick Shah have an aggressive target of cash plus 7%. To achieve this, the managers have taken more risk than peers and are willing to allocate assets aggressively. The managers’ more nimble decision-making approach and effective use of other JPM teams are behind the timely allocation changes and strong stock selection. Their decisions are often taken ad hoc after across-the-desk discussions rather than informal committee meetings.
First State Global Listed Infrastructure: This fund invests in companies that are mainly listed in developed markets and involved in various areas of infrastructure, including energy, communications and transport. These sectors tend to be defensive in nature and have reliable income-generating characteristics. The team is led by Peter Meany, who launched the strategy in 2007. The managers invest in infrastructure companies that are priced below their true worth. Meany likes companies that provide essential services, since they can often raise prices in line with inflation without causing a drop in demand. This should help generate a regular income.
Adrian Lowcock is head of personal investing at Willis Owen.