05 Jul 2021
Every month we study the universe of funds in the investment marketplace to assess whether they meet our exacting standards and should be given the RSMR seal of approval.
JP Morgan Emerging Markets investment trust has a focus on growth companies within global emerging markets. The managers seek out companies exhibiting earnings growth, the longevity of which is often under appreciated by the wider market. The trust has been running for over 30 years and benefits from one of the most established teams in emerging markets. The trust’s ability to capitalise on opportunities lower down the market cap and run winners for longer are key benefits within the closed ended vehicle. The recent lowering of fees and performance makes the vehicle even more attractive for long term holders.
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JP Morgan Emerging Markets Income trust builds on the capabilities of the emerging markets platform with the managers attention on earnings, cashflow and dividend strategies outlined by investee companies. The managers take a diversified approach to the income received into the trust with a barbell approach of low yielders which are growing income and high yielders complementing the core income payers in the portfolio. The trust benefits from revenue reserves to smooth income payments to shareholders and a cut in the management fee ensures costs continue to be competitive for shareholders.
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The Montanaro European Smaller Companies fund leverages the groups' small cap specialism in looking for companies which operate in structurally attractive sectors. The group’s keen focus on financial statements ensures that it utilises its proprietary valuation framework, looking to undue expenditure which lowers profits and reward investments made in areas such as R&D, branding and marketing. The focus is to reward companies investing for the future and to take a longer term view of a company’s prospects. The trust is supported by one of the largest analyst teams focused on small and mid cap within Europe.
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The Cerno Global Leaders portfolio is a high conviction portfolio of 30 of the world’s leading businesses. The focus is on long-term growth from constituents which are facilitating consolidation in a fragmented market and often entrenching their competitive position. The teams' detailed analysis of companies and sectors looks for businesses which can hold a sustainable competitive advantage in an industry over a decade-long time frame. This can lead to companies that are critical to a supply chain and one or two steps back from the end consumer or those that have brand power. The result is an equal-weighted portfolio where each investment must justify its presence in the concentrated portfolio. The fund has material exclusions from sectors such as energy, commodities and banking amongst others, disliking the level of leverage that companies can carry.
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The Baillie Gifford Global Discovery fund is a specialist approach investing in immature businesses which, at the time of initial investment, are small caps. The fund then looks to exploit the asymmetry of returns available from equity investment by holding these until they reach maturity. It is managed by a global leader in growth investing and has an experienced lead manager as decision maker. The fund focuses on capturing market outliers. It looks to maximise the returns available from equities and will accept short-term volatility to achieve this.
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The fund offers investors a value-orientated approach in Japan but combines this with a distinctive process compared to many value managers. It is managed by a well-established specialist value team with its own dedicated analyst back up. The value team has a record going back over 25 years. There is a focus on companies providing goods or services needed by society to avoid businesses in structural decline. The team take a pragmatic view on value and hold a number of winners which were purchased when out of favour but can now be seen in many growth orientated strategies. The fund has an excellent long-term record delivering outperformance even when value has been out of favour and can be used as a core holding in Japan.
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