Six funds with the X Factor

Sam Slator 09/10/2017 in Equities

The build-up to Christmas has officially begun: Strictly Come Dancing and the X Factor are back on our TV screens and vying for top position in the weekend viewing numbers.

I’m more of a Strictly fan, darling. However, the X Factor judges – while obviously not mathematicians, if their absurd percentages are anything to go by – seem to win the war of the words, with some ‘shamazing’ phrases.

So, with this in mind, here are six funds which have the attributes to make it to the live shows:

    • Being ‘relevant’: M&G Episode Income

      This multi-asset fund aims to produce monthly income and long-term capital growth by investing in a diversified range of assets. The term “episode” 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. At a time when interest rates are at record lows and investors all over the globe are chasing yield, its frequency of income distribution and relatively low volatility makes this fund relevant to all income investors.


    • Being ‘relatable’: Polar Capital Global Insurance

      Everything around us is insured. Our homes, our cars, our health and our lives. Regardless of economic boom or bust, we aim to protect ourselves and our families. The managers of the Polar Capital Global Insurance fund know this market inside out. Their many years of experience working in the risk and casualty insurance markets are fundamental to the success of this fund, which provides access to this specialist and often undervalued sector.


    • Having ‘likeability’: Threadneedle European Select

      One of the nicest fund managers I know is David Dudding, who runs Threadneedle European Select. I’ve known him for 15 years and have invested in his funds for about a decade. David has developed a distinctive process that focuses on industry structure and a company’s competitive position. Firms that can defend their margins and industries, with barriers to entry are preferred. He and co-manager Mark Nichols have a fantastic understanding of the companies they invest in. The fund has also delivered some of the strongest returns in the sector, while simultaneously being one of the least volatile funds. It is especially strong in down markets.


    • Being ‘authentic’: L&G UK Special Situations

      Straight-talking Richard Penny uses his stock-picking skills to find under-the-radar or undervalued companies with the ability to grow more than market expectations, or to recover from recent setbacks. He has managed money on this fund through many different market scenarios, and this experience helps him to look past the obvious and identify the real source of a company’s success. Richard is, by his own confession, a tight-fisted Yorkshireman when it comes to his investments. He likes to find a bargain, and over his tenure or more than 10 years at L&G, he has proven himself very able to do so.


    • Daring to be different: Investec Cautious Managed

      This multi-asset fund is managed by Alastair Mundy, whose contrarian style and philosophy makes his process distinct. He likens his style to “looking in other people’s dustbins for ideas”: every now and then he finds something of value that has been discarded. He is focused on long-term performance and would rather struggle and explain himself in the short-term than compromise this outlook. He buys companies that are significantly out-of-favour, and he won’t chase new fashions or high growth stories. He can wait many years before purchasing a holding.


    • The sob story: Schroder Recovery

      This is a patient and deep value-driven fund, investing in companies which have been through a hard time, are valued at less than their true worth and are waiting for a correction. Recovery investments can be out of favour for many reasons, including weak short-term profitability, macro-economic concerns or a weak balance sheet. These factors can significantly reduce the attractiveness of a stock over the short term, causing it to trade at a discount to fair value. So recovery investors need an open mind and thick skin – being contrarian can be uncomfortable but very profitable. They also need a long-term investment horizon, which is increasingly difficult in today’s world, although the track record of this fund suggests this is not impossible.

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.