This site uses cookies. Some of the cookies are essential for parts of the site to operate and have already been set. You may delete and block all cookies from this site, but if you do, parts of the site may not work. To find out more about cookies on the website and how to delete cookies, see our Privacy and Cookie Policy.

Ten up-and-coming funds that should be on your radar

It is always satisfying to get access to the next big thing before your peers, and investing in funds is no different – whether you’re an adviser or a private investor.

There are a number of important milestones when it comes to funds, with many investors unprepared to hold one unless it has a certain track record. Some see three years as the magic number, some prefer five years, while others – including Hargreaves Lansdown’s Mark Dampier – prefer to look at manager records instead.

Here we look at some of the very new funds that deserve to at least be on your watch list, as well as some others that have recently achieved the three-year milestone.

Funds without a three-year record

Three years is regarded as the absolute minimum track record for some investors, but be warned – there are many funds that have long soft-closed before this amount of time.

Take Gervais Williams’ (pictured) CF Miton Multi Cap Income fund, for example, which is set to close its doors to new money as a result of strong demand, even though it has only recently achieved its two-year track record.

The 182m portfolio is by no means the largest in the IMA UK Equity Income sector, but its focus on small caps means that it has a much smaller capacity than the majority of its peers.

Investors can still get access to the fund – which is top decile in its sector since its launch in October 2011 with returns of 68.69 per cent – but they must be quick: it officially closes to new money at the end of the month, on 29 November.

As well as being one of the best-performing funds, CF Miton Multi Cap Income has also been one of the least volatile, as the risk/return graph over two years below illustrates.

Risk/return of fund vs sector and index over 2yrs

202013_Article_charts_%20&_graphics/20131116_miton_1.png /%

CF Miton Multi Cap Income requires a minimum investment of 1,000 and has ongoing charges of 1.77 per cent. To hear Williams’ views on where he thinks markets are going, log in to FE Trustnet tomorrow to read an interview with the manager.

In a similar vein, Giles Hargreave’s Marlborough Multi Cap Income fund has yet to achieve a three-year track record, yet is already attracting a huge amount of attention. It is seen as one of the main competitors to Williams’ vehicle, and has already attracted 503m since its launch in June 2011.

Although there has been no talk of it soft-closing, it is clear that the manager’s multi-cap focus means that it cannot keep growing at the current pace.

The fund has actually beaten its Miton rival since the latter’s launch, with returns of more than 70 per cent, though it has been slightly more volatile.

Performance of funds and sector since Oct 2011

202013_Article_charts_%20&_graphics/20131116_miton_2.png /%

Hargreaves, an FE Alpha Manager, is one of the most established fund managers in the UK, particularly in the small cap space. His fund has a slightly more mid to large cap weighting than Williams’, though it is still very different from the run-of-the-mill blue chip focused UK Equity Income funds.

It requires a minimum investment of 1,000 and has ongoing charges of 1.64 per cent.

FE Alpha Manager Harry Nimmo’s Standard Life Global Smaller Companies fund is another that needs to be closely monitored, given its focus.

Nimmo’s reputation has already seen it attract more than 150m in assets since its launch last year, and its numbers have been very strong. The manager’s UK small cap portfolio has already closed to new money.

Other highly rated funds that have made a promising start include the AXA Framlington UK Mid Cap fund, which is co-managed by industry legend Nigel Thomas and is a top-decile performer in its IMA UK All Companies sector over a one-year period.

Launched in March 2011, it is available across major platforms and has ongoing charges of 1.7 per cent. Chris St John is lead manager.

Funds that recently achieved a three-year record

A number of top-performing funds with high-profile managers have recently achieved a three-year track record, such as the 1.5bn Fundsmith Equity portfolio run by Terry Smith (pictured).

Smith, who spoke to FE Trustnet in an exclusive interview earlier this month, runs a global portfolio of companies predominantly from the US, UK and Europe. He tends to target well-established, large cap companies that are industry leaders, including Domino’s Pizza, Imperial Tobacco and Intercontinental Hotel Group, which are all top-10 holdings.

This process has worked a treat since he took over the fund in November 2010: our data shows it has more than doubled the returns of its IMA Global sector average over three years, with returns of more than 60 per cent. It has also been less volatile over the period.

Performance of fund and sector over 3yrs

202013_Article_charts_%20&_graphics/20131116_miton_3.png /%

The Schroder Asian Income Maximiser fund has also recently celebrated its three-year anniversary – in June of this year. It is an unusual product in that it targets a very high yield from a market that has traditionally been associated with growth.

With the help of call options, managers Thomas See and Richard Sennitt have managed to put together an Asian equity portfolio that yields 7 per cent. It has also done well from a total return point of view, and is a top-quartile performer in its sector over three years.

Two other emerging markets-focused funds that are beginning to gain traction with investors have also just recently achieved a three-year track record: Charlemagne Magna Emerging Markets Dividend and Somerset Emerging Markets Dividend Growth.

Like the Schroders fund above, both target a yield but do not use call options, giving them greater flexibility to maximise their growth potential.

Both were launched in 2010 and have built a strong record over that period. Our data shows that the Charlemagne and Somerset funds are top-quartile performers over a three-year period, and also have competitive yields, at 4.78 and 3 per cent, respectively.

Performance of funds and sector over 3yrs

202013_Article_charts_%20&_graphics/20131116_miton_4.png /%

Keeping on the global income theme, the 338m Artemis Global Income fund achieved its three-year track record this summer. The group has a sterling reputation when it comes to UK equity income, thanks to Adrian Frost’s Artemis Income fund, which has been one of the best sellers in the IMA universe of recent years.

However, Artemis has proved that it is adept in the global sector as well. Under the guidance of Jacob de Tusch-Lec. Artemis Global Income has delivered top-quartile returns of 67.28 per cent since its launch in July 2010, which compares with 48.64 per cent from the sector.

De Tusch-Lec invests predominantly in developed markets, but does have some Asian exposure. The portfolio is currently yielding 4 per cent.

Finally, the five crown-rated CF Odey Portfolio celebrated the three-year milestone in May of this year. It is the only multi-asset fund to make the cut.

Sitting in the IMA Mixed Investment 40%-85% Shares sector, it invests in equities, bonds, cash and alternative assets, including hedge funds and property. Bonds are currently underweight positions, while equities are a slight overweight.

Manager Peter Martin has returned 41.72 per cent since its launch, which puts it in the top quartile of its sector. He has also beaten his FTSE APCIMS Balanced Portfolio benchmark over the period.