Overlooked opportunities in mid-caps
I’m sure most people have heard of middle child syndrome – some have no doubt experienced it...
One thing I’ve noticed during lockdown is just how much is spent on ‘discretionary’ items. For example, date nights used to be dinner at a nice restaurant. For the past three months or so, they’ve been a fancy recipe to try and a good bottle of wine – all costing significantly less than our normal date night allowance. Sure, it’ll be nice to be waited on again, but I think monthly instead of weekly will be just fine.
It’s not just meals out either. My bi-weekly manicures and pedicures have stopped, alongside my monthly facials – none of which were particularly cheap – and the savings are building up into a happy little sum in our bank account. While I’m eager for my husband’s barber to open quickly (I wasn’t cut out for the stress of being a hairdresser), I’ve had to admit the world didn’t stop spinning without pretty nails.
And assuming we carry on with some of our new lockdown habits, we could be looking at an extra £400 a month, which could then be invested! When you combine these changes to my discretionary spending with my altered Starbucks habits from a few years ago, I’ve come a long way in saving for retirement.
‘I believe in manicures…I believe that tomorrow is another day and I believe in miracles.’ — Audrey Hepburn
If you too have been saving during lockdown, you might like to consider investing your nest egg. Here are eight suggestions.
This is a multi-asset fund with a difference: the word ‘episode’ in the name refers to those periods of time when investors’ emotions cause them to act irrationally. The fund manager uses behavioural finance to find pockets of value and invest against the herd rather than following it. For those nervous of the stock markets after recent falls, it might appeal.
Listen to the manager on this recent podcast and get some behavioural finance tips:
This is a concentrated fund focusing on small and medium-sized companies across global emerging markets, so it is one of the riskier Elite Rated funds, but has the potential for excellent long-term returns. The mangers have identified certain themes that will drive growth in the asset class, including 5G, the digitalisation of the economy and improving financial requirement for the burgeoning lower middle class. Co-manager Kunjal Gala talked us through each emerging market in a recent podcast.
For those who like the exciting opportunities that Asia has to offer, this fund may be a good choice. Manager Eric Moffett invests in companies with established, leading market positions and good management teams who prioritise shareholder returns. Eric’s ‘safety first’ approach means he focuses on downside protection, so tends to do very well when times are tough. The fund has performed very well during the recent volatility and you can hear Eric’s views on this podcast.
The US has been one of the strongest equity markets for some time. This fund is a highly differentiated active US equity fund, with a greater emphasis on mid-caps than most of its peers. The fund is concentrated, with just 35-45 holdings, and invests in capital-light businesses with strong reinvestment opportunities capable of compounding over time. Co-manager Hugh Grieves told us in a podcast that the best time to buy smaller companies is in the midst of a recession.
A little closer to home, this fund is unashamedly growth-orientated. While it naturally focuses on medium-sized companies, its manager will be pragmatic about including select opportunities from the smaller companies space, as well as letting winning mid-cap holdings grow into larger-sized companies. In a recent podcast, amongst other things, he told us why the FTSE 250 is more internationally-focused than many may think.
For those preferring a more global approach, this fund is run by a four-strong team from London, Sydney and New York. The fund can invest in any company from around the world and has a natural bias towards larger-sized companies, as the managers are looking for industry leaders and firms that have an edge in their respective business sectors. It is run with conviction – there are only 26 holdings* – and so looks very different to most other global funds.
If you prefer something a little different, then this fund is an option. It still invests in equities, but focuses on those that are related to the property sector. Manager Alex Ross has a flexible mandate to invest in real estate investment trusts from across Europe, including the UK – from those investing in student accommodation through to storage and industrial units. The target is twofold: to generate income while also providing an attractive growth level.
And finally, if picking individual funds and creating your own portfolio is just too much to think about, this fund does all that for you. It’s a fund that invests mainly in other equity funds – five of which are currently Elite Rated*. The team uses its expertise to select who it believes to be the best fund managers in each asset class and region, with the aim of producing the best possible returns.
These fund suggestions are just a starting point. Be sure to do your research or contact a financial adviser if you think you need one. I doubt you’ll regret investing even a little bit of money in 40 years’ time. And if you can’t use an enforced situation like lockdown to self-reflect and make your finances better, when can you?
*Source: fund fact sheet, 31 May 2020