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As we start a new year, FundCalibre’s research team takes a look at the funds and trusts we should be watching in 2022:
2021 was another extraordinary year for investors. The Reddit crowd backed Gamestop and became a thorn in the side of hedge fund managers, the Suez Canal got blocked, semiconductors became gold dust, and inflation made a come-back. Some fund managers excelled, but can they repeat their success in 2022?
Goldman Sachs India Equity Portfolio – Indian equities had a slow start to 2021 as the country fought a particularly bad wave of Covid. But the stock market stormed back in the second half of the year. This fund was the best performing Elite rated fund of 2021 with returns of 36.8%*.
Fidelity Special Values – value investing was deemed to be all but dead by many investors, but it too staged a comeback in 2021 on the back of the vaccine bounce and economies reopening. This trust, which invests in unloved companies and waits for them to return to favour, had an excellent year with returns of 26.7%*.
With change comes opportunity and the pandemic has certainly altered many aspects of our everyday lives. A number of funds have been launched recently – some looking to exploit very specific opportunities.
Schroder British Opportunities – launched in December 2020, this trust targets ‘high growth’ firms which are set to benefit from the rapid change in corporate and consumer behaviour due to Covid-19; and also ‘mispriced-growth’ companies which, despite their current struggles, offer products and services with long-term structural growth drivers. The portfolio consists of 30-50 small and medium-sized public and private businesses requiring fresh injections of equity.
Artemis Positive Future – this fund was launched in March 2021. Its four-strong team is looking for those firms making a material positive impact on the world through either environmental or social improvements. The managers want to capture the rapid adoption of new industries as the world changes from old, obsolete industry to new sustainable technology.
Not all funds had a good 2021. For some it was a tough year and one the managers will be wanting to put behind them.
Allianz Strategic Bond – The manager of this fund runs it to have very low correlation to both equities and bonds, making it a useful tool in a portfolio. It had a stellar year in 2020, going up in the March when everything else went down and returning some 31% over 12 months**. In 2021, however, it gave up some of those gains, posting a loss of 7.9%*. But the fund remains well ahead of benchmark and peer group over three and five years***.
Baillie Gifford Global Discovery – One of the best performing global equity funds of 2020 with returns of 76.8%**, this fund also suffered in 2021 because market sentiment and inflation worries hit the underlying stocks – most of which tend to be early-stage businesses with the bulk of their projected cashflows further into the future. With losses of 20.6%* over 2021, there is no doubt it has been a hard year for the fund’s investors, but we believe in the process and the long-term prospects, so still support it.
A third anniversary is a real milestone in the investment world, as it is deemed to be a long enough period to properly assess a fund manager’s skills. It is also the minimum tenure required for a fund to be considered for an Elite Rating.
Jupiter European – Mark Nichols and Mark Heslop took over the management of this fund in 2019, when Alexander Darwell left the firm, taking the newly named European Opportunities Trust with him. The managers try to identify companies with first class management teams, strong business models exposed to the drivers of long-term growth and sustainable returns on capital.
Man GLG High Yield Opportunities – Mike Scott took on this fund in June 2019. He has demonstrated excellent stock picking ability throughout his career, and has brought that talent into this fund, as well as expanding his investment flexibility to being able to take short positions and thus potentially benefit from falling prices too.
While Indian and US equities did well in 2021, other countries and regions did not. Among the worst performing areas was Latin America once again, and China – hampered by recent regulatory intervention from the government. Both regions offer opportunities to turn their fortunes around in 2022.
Invesco China Equity – This fund had a name change in October 2019. Historically, it invested in shares traded on Hong Kong stock exchanges, but it now has increased exposure to Chinese companies through China A shares listed in Shanghai and Shenzhen. The new name is a result of this investment shift and, if the Chinese equity market does better next year, this fund is ideally placed to benefit.
ASI Latin American Equity – ASI Latin American Equity is managed by abrdn’s renowned emerging markets team, whose primary investment concern is whether companies demonstrate outstanding quality characteristics, such as strong management and balance sheets. This is then followed by a value approach, targeting stocks which appear to trade for less than they should do.
*Source: FE fundinfo, total returns in sterling, calendar year 2021
**Source: FE fundinfo, total returns in sterling, calendar year 2020
***Source: FE fund info, total returns in sterling to 5 January 2022