The funds the ‘eggsperts’ are backing this ISA season

Sam Slator 27/03/18 in Strategy

With just a handful of days to go before the tax-free ISA deadline rears its head, and a nice long Easter weekend to think about what you want to do with your finances, we thought it might be prudent to ask the research team at FundCalibre which funds they are backing this ISA season and why.

Darius McDermott, managing director

“At the moment, nothing is cheap in markets. However, emerging market equities are attractively valued when pitted against their developed market counterparts. We also think there are a number of economic drivers which should set emerging market stocks in good stead over the long term. These include improving corporate governance, favourable demographics and a rising middle-class, to name but a few.

“I like Lazard Emerging Markets in particular because its manager James Donald’s value-focused investment approach is a little out of favour at the moment; this means it could be a good time to buy in. The law of mean reversion, as well as the fact that market behaviour is cyclical, means this fund could well pique investors’ interests and should present itself as an attractive long-term holding.

“James looks for unloved emerging market companies and tends to hold between 70 and 90 stocks at any one time. He aims to identify the global brands of the future and conforms to the Lazard philosophy that how a company does business is more important than where it is domiciled.”

Juliet Schooling Latter, research director

“I’m investing for the long term, so I tend to favour equities even when stock markets are volatile. At the moment I’m nervous about the UK and think the US is toppy, so I have chosen to go global this year and add a little bit of emerging market spice on the side.

“I have invested half of my ISA allowance in T. Rowe Price Global Focused Growth Equity, which invests all over the world, is high-conviction and should benefit from the global economic recovery. I have then put a quarter of my allowance in Goldman Sachs India Equity Portfolio, which is an all-weather fund whose process works throughout the market cycle. Like the population, the investment opportunities are still young in India and Modi’s pro-business initiatives are really helping.

“The rest of my allowance is in Aberdeen Latin American Equity. Interest rates in Brazil have collapsed, inflation is falling, as is the debt and there has been a pick up in growth. Reforms are taking place in Argentina and Mexico is coping well in spite of Trump!”

James Yardley, senior research analyst

“A manager who has achieved an absolutely astounding long-term track record over the years is Giles Hargreaves, who heads up the Marlborough UK Micro-Cap Growth fund.

“Giles has run this portfolio since its launch in 2004, having founded Hargreave Investment (which has since merged and become Hargreave Hale) in 1986 and has always specialised in companies which reside further down the cap spectrum. He was joined by co-manager Guy Feld in 2012, who has over 25 years’ experience investing in smaller companies..

“Both managers are well-placed to uncover some of the very smallest listed UK companies – one of the riskier areas of the market – and they have done so over the years with both strong returns and minimal nasty downside surprises.

“This fund could be held alongside Giles’s Marlborough Special Situations fund which, although it also resides in the IA UK Smaller Companies sector, has more of a focus on small and medium-sized companies as opposed to micro ones.”

Ryan Lightfoot-Brown, research analyst

“The domestic-facing stocks in our market have been beaten up in the aftermath of Brexit and this allows for the right manager to seek out individual stock opportunities. Not only this, with the valuation of sterling turning a corner and a glimmer of light at the end of the Brexit tunnel, now could be a good time to buy British.

“The UK’s medium-sized companies appeal to me and I like F&C UK Mid Cap, which is managed by Thomas Wilson. Thomas, who has co-managed the fund since 2009 and took over the helm completely in 2015, will hold between just 25 and 35 stocks at any one time. This means that it is slightly higher-risk than some other funds in the sector, but his stock selection track record serves as piece of mind – he has even managed to perform well when his value investing style has been out of favour.

“I also like the fact that he has a strong valuation discipline and that his process, while clear, is not overly rigid.”

Tony Yousefian, investment trust specialist

“The Japanese market continues to be supported by loose monetary policy – both the Bank of Japan and Prime minister Abe are doing all they can to keep the long-overdue economic recovery on track.

“Compared to most other developed markets, Japan is also relatively good value and the investment opportunities are increasing: the operating environment for Japanese companies is improving and corporate profits are looking healthy.

Inflation is still a worry – after two decades of deflation, prices are finally starting to rise, but it is still some way off the 2% target and wage inflation is still subdued, but I am confident they will get there.

“My pick is Baillie Gifford Japan Trust this ISA season. Its team are very much long-term investors and look for businesses which have clear advantages and sound business models. They pay particular attention to companies which they believe will continue to stay ahead of their competitors and grow year-in, year-out.”

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. Remember, all investments can fall in value as well as rise, so you could make a loss. 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.