After recent downward pressure on markets from rising geopolitical tensions in Ukraine and the Middle East, the FTSE 100 has slipped up above the 6,800 mark this morning. UK stocks were buoyed by reassurances yesterday from Mark Carney, the Bank of England Governor, that increases in interest rates will be more restrained than in the past, given the continuing challenges faced by the UK economy. He pointed to a stronger pound, weak demand in key export markets and government budget-cutting as factors holding back growth.
As far as prospects for the UK market are concerned, Mark Barnett, fund manager at Invesco Perpetual, comments on Fundweb that in general, this year has been pretty nondescript.
‘Concerns over the situation in Ukraine and, more recently, Iraq and the outlook for economic growth in China have outweighed positive news on UK employment and inflation,’ he says.
‘I see the outlook for the stock market as more representative of a market which is on the expensive side of fair value, not in bubble territory by any means but just up with events. So I would not be surprised to see the market move sideways for a period.’
CHART TOPPERS
Bestinvest’s worst-performing Dogs
The latest Spot the Dog report from Bestinvest reveals 49 funds that have been serial underperformers over each of the past three years. The worst performing five funds for a £100 investment over three years are as follows:
| 1. SF Webb Capital Sm Cos Growth | (£100 is worth £44 after 3 yrs) |
| 2. FP Hexam GEM | (£64) |
| 3. Neptune Emerging Markets | (£79) |
| 4. Baring Emerging Markets | (£81) |
| 5. Martin Currie China | (£89) |
Winterflood’s investment trust outperformance statistics
In its quarterly review, broker Winterflood found that over one year to the end of May, investment trusts outperformed the equivalent open-ended funds in 11 out of 17 sectors. Over 10 years the number of outperforming sectors rose to 14 out of 17. The biggest outperformances over 10 years were as follows:
| 1 UK All Companies | 3.2% pa |
| 2 UK Equity Income | 3.2% pa |
| 3 Global Emerging Markets | 2.9% pa |
| 4 Europe | 2.8% pa |
| 5 Global | 2.6% pa |
| 6 UK Smaller Companies | 2.2% pa |
| 7 North America | 1.7% pa |
| 8 Asia Pacific | 1.6% pa |
| 9 Japan | 0.5% pa |
Barclays Stockbrokers top sellers in June
Barclays Stockerbrokers director Alastair Thaw said: ‘UK focused funds are still the most represented sector but they now make up less than half of the top 20, down from the consistent 13 places out of 20 seen throughout the first half of the year. We are starting to see a more diversified list as clients look for opportunities in changing markets.’
The top ten looks like this:
| 1 CF Woodford Equity Income C Acc | UK Equity Income |
| 2 CF Woodford Equity Income C Inc | UK Equity Income |
| 3 Marlborough UK MicroCap Growth | UK Smaller Companies |
| 4 AXA Framlington Biotech | Specialist |
| 5 Fundsmith Equity | Global |
| 6 Artemis High Income | Sterling Strategic Bond |
| 7 Jupiter India | Specialist |
| 8 Aberdeen Property Share | Property |
| 9 Fidelity UK Smaller Companies | UK Smaller Companies |
| 10 Investec UK Smaller Companies | UK Smaller Companies |
The AIC’s most viewed investment trusts for H1 2014-07-22
‘Two thirds of the traffic on our website is visitors analysing individual profile pages of our member companies. So it’s illuminating to see that the clear theme in the first half of the year is very much income focused, whilst the large, retail focused UK and Global investment companies also continue to capture a large share of the audience,’ says Ian Sayers, AIC director general.
| 1 Murray International | Global Equity Income |
| 2 Scottish Mortgage | Global |
| 3 BlackRock World Mining | Sector Specialist: Comms & Nat Resources |
| 4 Finsbury Growth & Income | UK Equity Income |
| 5 Aberdeen Asian Smaller Companies | Asia Pacific – Excluding Japan |
| 6 City of London | UK Equity Income |
| 7 Aberdeen Asian Income | Asia Pacific – Excluding Japan |
| 8 European Assets | European Smaller Companies |
| 9 Edinburgh Investment | UK Equity Income |
| 10 Temple Bar | UK Equity Income |
EXPERT TIPS
The Share Centre’s funds for New Isa investors as the limit rises to £15,000
Andy Parsons of the Share Centre picks three fund that could be attractive for investors looking to top up their Isa allowance.
1 Artemis High Income: ‘This fund is suitable for investors seeking additional income through a combination of debt and equity backed investments. Managed by Adrian Frost and Adrian Gosden, the fund has a minimum of 80% invested in bonds, with the added benefit of up to 20% invested in equities, which helps capital growth.’
2 Schroder Recovery: ‘As its name suggests, this fund invests in companies where the profits or share price have suffered a setback but the prospects for future recovery are encouraging. The managers look to the long-term value of a stock, rather than short-term gain and the fund typically comprises of 60 to 80 stocks.’
3 Legg Mason Japan Equity:‘This fund, managed by Hideo Shiozumi, seeks to benefit from the economic and structural changes that Japan faces. These changes may be the result of the continuing and ongoing rapid emergence of the internet as a sales channel, the opportunities created by the ageing population, or the medical and long-term care industries needed to help support the nation.’
Morningstar’s core holdings for an Nisa portfolio
Morningstar’s Szymon Idzikowski selects three highly rated investment trusts suitable for long-term investment.
1 Witan Investment Trust: ‘One way to start building your NISA portfolio is by finding a good global fund manager to ensure diversification across sectors, stocks and regions. What makes this particular fund quite unique is that it is a multi-manager. The team use external fund managers to run individual sleeves. For example, names such as Artemis and Lindsell Train run the UK sleeve, Matthews runs the Asian sleeve and MFS run the global sleeve.
2 Scottish Mortgage: ‘This is different from Witan Investment Trust in that it is much more concentrated, with only 60 to 80 names in the portfolio, and the top 10 holdings accounting for more than half of the fund’s size. A lot of the names in the portfolio are well known technology companies. The fund is also cheap.
3 F&C Global Smaller Companies: ‘This fund is run on the ethos that smaller companies will outperform larger companies over the long term. The trust operates a blended approach compared to the previous two examples. Peter Ewins is responsible for both asset allocation and stock selection in the UK. Outside of the UK, he employs Sam Cosh to select Euro pean stocks. Nish Patel picks stocks in the U.S., and for other regions, the trust employs external fund managers. We believe this is a good use of resources.’
Fundweb’s funds that bucked the mid cap sell-off
Over the three months to the end of June, only two mid cap funds produced positive returns.
1 Neptune UK Mid Cap: ranked in the top five best performing funds in its sector over three and five years and has delivered the strongest returns for investors at 1.73%
2 Investec UK Special Situations, Alastair Mundy’s fund was the only other fund to post positive performance, returning 0.43 per cent over three months.
3 Aberdeen UK Mid Cap lost 0.7% but still beat the FTSE 250, which lost 3.5%.
FUND NEWS
Alliance Trust Investments has launched two new funds in its Sustainable Future range – the Defensive Managed and Cautious Managed funds. Both are ‘risk-profiled’ to suit particular types of investor.
Miton’s veteran manager Bill Mott, who runs the Psigma Income fund, is to retire at the end of the year. He will hand over to the current co-managers Eric Moore and Gervais Williams.
BNY Mellon and Insight Investment have launched the BNY Mellon Absolute Insight fund, a global, multi-strategy absolute return fund.
Invesco, Fidelity and First State top the tables as the investment houses with the largest number of five FE crown funds. Invesco has 12, First State 11 and Fidelity 10 after the latest round of fund re-rating by FE.
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