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15 fund stars rising up our ratings system

We have picked out managers across the investment universe entering or moving up the Citywire ratings over July and August 2018.

Kevin Murphy and Nick Kirrage

Sector: Equity - UK (All Companies)

Fund: Schroder Responsible Value UK Equity

There have been a number of new fund launches over the past couple of years under the ethical, social and governance (ESG) and socially responsible investment (SRI) banners as the theme gains traction with investors and planners.

But this is an existing mainstream fund that has undergone its own damascene conversion to reposition itself as a sustainable investment.

In February the Schroder Specialist Value UK Equity fund changed its name to Schroder Responsible Value UK Equity fund. Its revised investment policy now excludes investment in tobacco, alcohol, gaming, weapons ‘and businesses involved in predatory lending practices’.

The fund’s description of its responsible investment policy also references investment restrictions on companies involved in pornography and human embryonic cloning.

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Kevin Murphy and Nick Kirrage

Sector: Equity - UK (All Companies)

Fund: Schroder Responsible Value UK Equity

There have been a number of new fund launches over the past couple of years under the ethical, social and governance (ESG) and socially responsible investment (SRI) banners as the theme gains traction with investors and planners.

But this is an existing mainstream fund that has undergone its own damascene conversion to reposition itself as a sustainable investment.

In February the Schroder Specialist Value UK Equity fund changed its name to Schroder Responsible Value UK Equity fund. Its revised investment policy now excludes investment in tobacco, alcohol, gaming, weapons ‘and businesses involved in predatory lending practices’.

The fund’s description of its responsible investment policy also references investment restrictions on companies involved in pornography and human embryonic cloning.

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Catherine Stanley

Citywire - A 

Sector: Equity - UK (All Companies)

Fund: F&C Responsible UK Equity Growth

Fund manager Catherine Stanley runs responsible UK income and smaller companies funds. This fund avoids companies whose activities harm society and the environment, and invests in companies that make a positive impact.

F&C also claims it will use its influence as an investor to encourage companies ‘to improve their management of ethical, social and governance issues through engagement and voting’.

Over the second quarter of the year its approach has stood it in good stead. As tobacco lagged the market, its zero weighting in British American Tobacco became the biggest individual contributor to performance.

The fund has a zero weighting in Barclays bank, also for ethical grounds. Avoiding oil giants Royal Dutch Shell and BP meant the fund missed out on some strong performance, making those stocks the main detractors.

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Michael Fox

Citywire - A

Sector: Equity - UK (All Companies)

Fund: Royal London Sustainable Leaders Trust

The fund aims for medium-term growth investing in mainly UK based ‘high-quality companies’ such as ITV and Google.

Another fund professing a ‘unique sustainable approach to investing’, its themes include: healthcare, urban regeneration, global infrastructure, climate change, emerging consumer market (how to serve markets like China, Brazil, Russia and India in a sustainable way) and sustainability.

The fund’s approach is to positively identify companies whose business promotes any of these areas. Urban regeneration is an area perhaps not talked about as widely as, say, climate change.

An example of a company it invests in is St Modwen, a land developer in the UK involved in the Rover site redevelopment in Longbridge

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Kenichi Amaki

Citywire - A

Sector: Equity - Japan

Fund: Matthews Asia Funds - Japan

Technology plays a major part in this flex-cap fund, with a 22.5% holding. Keyence Corporation, a direct sales organisation and example of a top holding, develops and manufactures automation sensors (used, for example, in lasers that measure distance), barcode readers, laser markers and digital microscopes.

Launched in 1998, Matthews Asia’s Japan fund has benefited this year from its technology holdings, although it did drag from a lack of exposure to utilities and stock selection in telecommunication services.

Overall the fund remains cautious about its outlook for Japanese equities, calling US president Donald Trump’s continued actions on trade the biggest risk. Citywire A-rated Kenichi Amaki joined Matthews Asia in 2008 from a family trust based in Monaco.

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Yasuaki Kinoshita

Citywire - A 

Sector: Equity - Japan

Fund: RWC Nissay Japan Focus

RWC Nissay’s strategy in Japan is to engage with a small number of companies it sees as not valued to their full potential. It says it works with investee boards diplomatically and sensitively to increase their companies’ value and improve shareholder returns.

This seems apt at a time when, despite previous scandals at Toshiba and Kobe Steel, corporate governance standards are on the up in the world’s third largest economy.

Citywire A-rated Yasuaki Kinoshita has been at the company since 2008 and is ranked 10th in this sector. The large-cap Japanese equity fund’s top holding is industrials, at 30.6%.

One example is M3, a company that provides online medical information to physicians and other healthcare professionals. For the first quarter of this year, M3 an reported operating profit of ¥7.8 billion (£54 million).

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Hiromitsu Kamata and Takeshi Suzuki

Citywire - A

Sector: Equity - Japan

Fund: Amundi Funds Equity Japan Target

This Japan small and mid-cap equity fund seeks to benefit from improved capital efficiency and increased shareholder value in Japan.

Amundi believes this is a market full of opportunity now reforms are being enforced and amid the Bank of Japan’s (BOJ) intriguing monetary policy. For nearly two decades the BOJ had used negative interest rates and other unusual monetary policy tools to tackle inflation, although this month it has tightened its policy.

This fund also looks for companies with undervalued potential, or that have made a turnaround. One of its top holdings is Toppan Forms Company, which supplies office equipment and printing and payment services. Manager Hiromitsu Kamata has held Citywire ratings on and off since 2016, and Takeshi Suzuki since 2017.

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Amy Zhang

Citywire - AA

Sector: Equity - US Small & Medium Companies

Fund: Alger SICAV-Alger Small Cap Focus

US-based Amy Zhang will be on the radar for many, but until recently she has not had a fund available in the UK. Her improved rating has been gained from her work across all strategies she runs worldwide, but her one-year ranking reflects her time on the UK-registered Alger SICAV-Alger Small Cap Focus fund, which launched in 2016.

The top sector held in the fund, at 44.3%, is technology, closely followed by healthcare at 37.8%. These are punchy percentages, making up nearly the whole fund. A top healthcare holding is US company Cantel Medical Corporation, which produces and sells medical equipment. 

Zhang is senior vice-president as well as a portfolio manager at Alger Management. She joined Alger in 2015 with 23 years of investment experience. 

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Sander Bus

Citywire - +

Sector: Bonds - Global High Yield

Fund: Robeco High Yield Bonds

Receiving a new rating in August is Robeco’s head of credit, Sander Bus. It is difficult to outperform in high yield, so his re-rating is noteworthy. Bus puts his money where his mouth is, investing in his own strategies.

Also managing the fund is Citywire A-rated Roeland Moraal, senior portfolio manager for high yield in Robeco’s credit team.

The managers use top-down analysis of the global high yield
bonds market, combined with bottom-up issuer analysis.

Their approach is conservative and long term with a bias towards higher-quality bonds. A top holding in the fund is Quintiles IMS Incorporated, now called IQVIA, a US multinational company that provides health information technology and clinical research.

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Rishikesh Patel

Citywire - AA

Sector: Equity - India

Fund: BMO LGM Greater India

London-based Rishikesh Patel achieved a Citywire AA rating for his performance in the Equity - India sector. Patel also manages funds in the global emerging markets equity sector. His co-manager on the BMO LGM Greater India fund, Sam Mahtani, was also newly A-rated in August.

The Ucits fund, launched in 2015, is 40.5% invested in financial services, including a 6.1% holding in Indian multinational bank ICICI Bank.

This aligns with LGM Investments’ company-wide investment ethos: long-term, quality stock-picking, typically in consumer, financial services, telecoms and healthcare.

LGM is a specialist Asian, global emerging market and frontier markets equity manager. At the end of July the fund’s managers said: ‘Indian equities had a strong month, helped by the generally strong earnings season and signs of improving domestic consumption trends.’

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Matthew Tonge

Citywire - AAA

Sector: Equities - UK Smaller Companies

Funds: Liontrust UK Micro Cap, Liontrust UK Smaller Companies

Matthew Tonge joined the Liontrust trading desk in 2003 and became a partner in 2011. In 2015 he joined the economic advantage team to help research and analyse companies across the small-cap universe. Along with three Citywire AAA-rated co-managers that make up this team, he runs two funds in the Equities - UK Smaller Companies sector.

The team’s philosophy is to look for companies that have an ‘economic advantage’ by displaying characteristics that are hard to replicate by competitors. For example, characteristics relating to the company’s intellectual property, distribution channels or recurring business. An example of a company in the Micro Cap fund is Nasstar, a UK-based IT specialist, which the fund holds at 2.8%.

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Rebecca Kaddoum

Citywire - AAA

Sector: Equity - Europe

Fund: Comgest Growth Europe Opportunities

Having held Citywire ratings every month since July 2015, Rebecca Kaddoum achieved her first AAA rating in August this year. She is also top of the European equities sector.

In her Comgest Growth Europe Opportunities fund, which she manages with AAA-rated Eva Fornadi and A-rated Franz Weis, Kaddoum looks for businesses that have their headquarters or carry out the majority of their activities in Europe. For example, the fund invests 7.6% in Munich-based technology company Wirecard, which offers electronic payment solutions.

A substantial 33.2% of the fund is allocated to healthcare, which may explain its good performance over the past three years. Kaddoum joined Comgest in 2010 from Citigroup and is a European equities specialist.

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David Fishwick

Citywire - AAA

Sector: Mixed Assets - Flexible

Fund: M&G Managed Growth

Although David Fishwick also runs a fund in the Alternative Ucits - Global Macro sector, he gained an AAA rating in August for his work on the M&G Managed Growth fund in flexible mixed assets. In this sector M&G use an investment approach that combines a valuation framework with elements of behavioural finance.

The Managed Growth fund invests at least 70% of its asset in other funds, such as 11.6% in the M&G Global Select fund, managed by Citywire + rated John William Olsen.

This gives exposure to a range of assets from anywhere in the world, including company shares, bonds, convertibles and cash. Although Fishwick typically invests in other M&G funds, he may also invest in other company’s funds where appropriate.

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Tom McGrath

Citywire - A

Sector: Mixed Assets - Balanced GBP

Fund: FP 8AM Focussed

8AM Global partner Tom McGrath re-entered Citywire ratings at the end of 2017 with a + rating after almost 10 years unrated. In August he moved up to an A rating for his work on the FP 8AM Focussed fund, which he co-manages with Andy Merricks, who is also head of
investments at Brighton and Hove-based Skerritts Wealth Management.

The fund, launched in 2013, has a top holding (9.7%) in the L&G Cyber Security Ucits exchange-traded fund. This tracks the performance of the ISE Cyber Security Index, which itself tracks the performance of cybersecurity businesses such as Cisco Systems, the US tech conglomerate.

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Mark Urquhart

Citywire - AAA

Sector: Equity - Global 

Fund: Baillie Gifford Long Term Global Growth Investment

As part of his long-term strategy, Mark Urquhart looks for companies that will stay the course, ideally still occupying a space in his portfolio in 30 years’ time.

However, these companies must adapt to achieve growth. The biggest holding in the Baillie Gifford Long Term Global Growth Investment fund is Amazon, at 9.75%, contributing to the fund’s 37.7% consumer cyclicals weighting.

Urquhart moved up to a Citywire AAA rating in August for his work in the Equity - Global sector, where he has impressively ranked first over three years, beating, for example, star managers Terry Smith (AAA-rated) and Nick Train (AA-rated), who are ranked sixth and 11th respectively.

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Matthew Barrett

Citywire - AA

Sector: Equity - Europe ex-UK

Fund: MFS Meridian Funds - Continental European Equity

Healthcare is the biggest sector weighting in this MFS Meridian fund, at 20.4%. Top holdings in this sector include 4.6% in Roche and 4.6% in Novartis, the Swiss pharmaceutical giant.

It is an all-cap fund, overweight Switzerland and France at the expense of the periphery. Some countries in continental Europe, particularly eastern Europe, are considered emerging market economies.

Matthew Barrett joined MFS in 2000 from Newport Capital, where he specialised in Asian equities. At MFS, as well as managing equity portfolios, he is an equity analyst and heads up the
company’s European research coverage of consumer stables stocks.

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Related Fund Managers

Tom McGrath
Tom McGrath
12/147 in Mixed Assets - Balanced GBP (Performance over 3 years) Average Total Return: 25.26%
Mark Urquhart
Mark Urquhart
1/464 in Equity - Global (Performance over 3 years) Average Total Return: 77.99%
Sander Bus
Sander Bus
12/62 in Bonds - Global High Yield (Performance over 3 years) Average Total Return: 17.70%
David Fishwick
David Fishwick
5/16 in Alternative UCITS - Global Macro (Performance over 3 years) Average Total Return: 9.39%
Matthew Tonge
Matthew Tonge
11/53 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 51.72%
Catherine Stanley
Catherine Stanley
25/53 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 34.23%
Amy Zhang
Amy Zhang
4/71 in Equity - US Small & Medium Companies (Performance over 3 months) Average Total Return: 2.66%
Takeshi Suzuki
Takeshi Suzuki
52/101 in Equity - Japan (Performance over 3 years) Average Total Return: 43.20%
Hiromitsu Kamata
Hiromitsu Kamata
51/101 in Equity - Japan (Performance over 3 years) Average Total Return: 43.20%
Yasuaki Kinoshita
Yasuaki Kinoshita
15/101 in Equity - Japan (Performance over 3 years) Average Total Return: 62.01%
Kenichi Amaki
Kenichi Amaki
66/101 in Equity - Japan (Performance over 3 years) Average Total Return: 42.08%
Rishikesh Patel
Rishikesh Patel
34/314 in Equity - Global Emerging Markets (Performance over 1 year) Average Total Return: -5.23%
Rebecca Kaddoum
Rebecca Kaddoum
1/195 in Equity - Europe (Performance over 3 years) Average Total Return: 69.91%
Matthew Barrett
Matthew Barrett
14/94 in Equity - Europe Excluding UK (Performance over 3 years) Average Total Return: 41.95%
Michael Fox
Michael Fox
102/124 in Equity - Europe Excluding UK (Performance over 1 year) Average Total Return: -10.10%
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