Japanese and US equities have been the clear winners so far this year. FE Trustnet provides some fund and manager picks for investors seeking to play these themes.
The best performing IMA sectors this year (in sterling terms) have been IMA Japanese Smaller Companies and IMA North American Smaller Companies returning 33.92% and 32.63% respectively. This compares to an increase in the FTSE 100 of 14.73% over the same period. The IMA Japan and IMA North America sectors followed close behind returning 26.07% and 28.13%.
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For investors trying to pick the most talented active managers to gain a foothold in these regions, FE Alpha Managers (judged by FE to be the top 10% of retail fund managers) include:
- Schroders’ Nathan Gibbs, Invesco Perpetual’s Paul Chesson and Polar Capital’s James Salter for Japan
- F&C’s Max Godwin for Japanese small-caps
- Polar Capital’s Andrew Holliman, GAM’s Gordon Grender and Baillie Gifford’s Mick Brewis for North American equity
- F&C’s Robert Siddles for US small-caps
- Schroders’ Jenny Jones for US small- and mid-caps
Pascal Dowling, Senior Executive at FE Trustnet, selects some of the best performing US and Japanese equity funds that are managed by FE Alpha Managers:
Baillie Gifford Japanese Smaller Companies
Baillie Gifford Japanese Smaller Companies has been the best performing fund of six in the IMA Japanese Smaller Companies sector over one and three years. FE Alpha Manager John MacDougall is a rising star in the industry with 13 years of experience, having joined Baillie Gifford after graduating in 2000. Since Mr. MacDougall became lead manager of the Baillie Gifford Japanese Smaller Companies fund in 2007, it has beaten its competitors in every period of rising markets and outperformed during two of three falling market phases.
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By GlobalDataSmaller company funds have outperformed large-cap peers this year, as is to be expected during rising equity markets. Higher beta small-caps are more geared into domestic growth and do well in times of optimism. The reverse is true in bear markets when size and stability are an advantage. An investment into Baillie Gifford Japanese Smaller Companies would therefore suit investors who are positive about the progress of ‘Abenomics’ and believe Japan’s outlook will continue to improve, particularly in light of Prime Minister Shinzo Abe’s recent electoral win in Japan’s upper house.
GLG Japan Core Alpha
GLG Japan Core Alpha is top quartile over one and five years. Stephen Harker, who has been an FE Alpha Manager since the ratings were launched in 2006, has put clear water between GLG Japan Core Alpha and its sector this year, returning 31.30% versus 26.07% for IMA Japan. Importantly for a market such as Japan which has experienced multiple false dawns, GLG Japan Core Alpha has outperformed during 75% of falling markets, which shows that its value investment approach has given the fund an element of downside protection. For investors who are bullish about Japan’s prospects but prefer the security of having an experienced hand on the tiller, GLG Japan Core Alpha would be a wise addition to their portfolios.
J.P. Morgan America Equity and J.P. Morgan US Equity Income
Over an extended period, FE Alpha Manager Jonathan Simon’s good stock picking has had a positive impact on results, while simultaneously shielding the funds he co-manages from the worst ravages of bear market periods. He is co-manager for J.P. Morgan America Equity, J.P. Morgan US Equity Income and J.P. Morgan US Value (of which only the first two funds sit within the IMA North America sector.)
