Funds to watch in 2019

Another new year is upon us and, for many, this signifies a fresh start and new opportunities ahead.

We identified five funds to watch as the year unfolds – funds that could offer similarly optimistic new investment opportunities.

Baillie Gifford Japanese Income Growth

This is the most recent addition to Baillie Gifford’s Japanese equity fund range. Launched just 18 months ago, it aims to take advantage of the improving corporate governance we are seeing in Japan. One of the big changes to occur in recent years it that more and more Japanese businesses are moving towards a progressive dividend-paying policy and this fund taps into this theme: a new corporate governance code, coupled with a large cash pile on Japanese balance sheets is a big opportunity for income-seeking investors.

FP CRUX UK Special Situations

This fund launched as recently as September 2018. It invests in UK companies of all sizes, but will typically have a bias towards small and medium-sized companies. It will also hold some carefully chosen AIM-listed companies. While the fund is new, the manager (who we have known for many years), style and process all have a good long-term track record. The manager likes to find a bargain, and over his career, has proven himself very able to do so. Having moved from a big company to a small boutique, this first year will be an important one for the manager to prove himself to potential investors.

LF Gresham House UK Multi Cap Income

With the UK stock market yielding close to 5%, we think UK equity income funds could do well this year. This particular fund has a bias towards smaller companies but can invest in businesses of any size. Under manager Ken Wotton, who also runs the highly successful Gresham House UK Micro Cap fund, this fund is just eighteen months old and is targeting an initial yield of 4%, with the aim to grow it over time. It is very early days, but the fund held up extremely well when markets fell at the end of 2018 and, since launch, is up 7% compared with a sector average loss of more than 5%*.

RWC Continental European

This fund is run by a highly experienced manager who has consistently outperformed. Having spent more than two decades at Fidelity, Graham Clapp launched his own business in 2006, which was subsequently bought by RWC in 2017. Despite his experience and impressive track record, Graham has remained somewhat under the radar for many UK investors. This could all start to change this year: after 30 years and more than 15,000 discussions with companies about their prospects, he is finding the opportunities to invest are better than ever.

VT Gravis UK Infrastructure Income

This more specialist fund marks its third anniversary at the end of January and we’ve liked it since its launch. It invests mainly in investment trusts exposed to different types of UK infrastructure; from railways and roads to GP surgeries and solar power. It yields 5.7% and offers an excellent way to invest in the growing need for infrastructure in the UK. It also offers investors some protection against rising inflation and we like the fact that it can invest in infrastructure debt, as well as infrastructure equities.

*Source FE Analytics, total returns in sterling, 30 June 2017 to 7 January 2019.

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.