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Fund tips: what have professional investors been buying?

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Five multi-managers reveal the motivation behind their most recent fund purchases.

For DIY investors, one of the biggest challenges is deciding which fund to invest in. With more than 2,000 to choose from, separating the wheat from the chaff can be a painstaking task.

In our latest fund tips article, we ask a selection of the UK’s best known multi-managers for the names of the funds they have recently bought – and why.

The job of a multi-manager is to pick the best funds and managers for investors, who want to outsource all the decision making to an expert.

John Husselbee, head of multi-asset at Liontrust: Schroder Asia Pacific investment trust

The emerging market & Asian regions have long been out of favour with UK investors, with funds in those sectors suffering outflows as concerns over China’s faltering economic growth, the strong dollar, and falling commodity prices weigh heavily on investors’ minds.

However, we believe much of this bad news is already priced into markets and, while we’re not forecasting a rapid turnaround as many challenges still exist, we believe that patience will be rewarded in the long term.

With that background in mind, one fund we’ve added to recently within our portfolios is the Schroder Asia Pacific investment trust. We had been watching its discount widening for a while and when it reached about 12%, its widest for more than a year, we thought this would be a good opportunity to pick up some exposure to the fund. It is managed by the highly respected Matthew Dobbs, who has a very good long term record investing in the region.

Marcus Brookes, head of multi-manager at Schroders: a range of commodity and energy funds

We have been gradually adding to our exposure in commodity and energy-related areas, via existing positions in funds such as Blackrock Gold & General, JPM Natural Resources, and Findlay Park Latin American.

The common consensus tells us that we are in a world where global growth hobbles along, deflation is a certainty, the US dollar remains strong, defensive quality companies continue to prosper, and a slowing China puts downward pressure on energy and commodities.

It appears to us that these themes are beginning to come under increasing pressure, and our exposure to emerging markets has come about through a desire to get greater exposure to some of the more unloved areas – in this instance energy or commodities.

A strong US dollar was once considered good for the global economy but it is clearly becoming more harmful, and the market seems to be slowly realising this. A stable (non-appreciating) USD is easing pressure on EM and in particular areas that have suffered most in the wake of its strength – notably energy and commodity related sectors.

Also an apparent bottoming of oil prices also greatly benefits EM nations, and already up 50% from its February lows, this upward trend seems to be sustainable, albeit potentially slowly and unlikely to reach previous highs anytime soon, if ever.

Simon Evan-Cook, fund manager at Premier Asset Management: Stewart Investors Latin America

We are drawn to Latin America in particular because it has become hated by investors the world over, as the economics and politics have been toxic of late. This has pushed valuations much lower than other regions of the world, particularly their North American neighbours, and it is that valuation that sparked our interest.

Naturally it is not without its risks. This is where the expertise of Stewart Investors comes in. They are able to pick the best companies that are better able to survive political or economic turmoil, and then emerge in a stronger position. This focus gives us confidence at a time that might otherwise be too scary to seize the opportunities thrown up by cheaper valuations.

The fund is run by Dominic St George, who recently took over the fund as part of manager rotations within the wider Stewart team. He has been steeped in the philosophy and process developed so successfully by Angus Tulloch, and we are confident he will be able to maintain that impressive track record for years to come.

John Chatfeild-Roberts, head of strategy for Jupiter Independent Funds Team: Fundsmith Equity

We have held Fundsmith for some time and added to it recently. In uncertain times we like the attraction of having an exposure to really good quality, enduring businesses which have the ability to grow their sales over the long term and which generate cash that can then be converted in to dividends which in turn are capable of sustainable growth.

Nick Peters, portfolio manager at Fidelity Solutions: JOHCM UK Dynamic

Falls in Sterling have boosted the UK equity market in recent months, but with the EU referendum fast approaching, the outlook is uncertain. Across the strategies I manage, I have a relatively neutral view on the UK on balance, but I think there are opportunities here for those who are willing to take risk.

I like the JOHCM UK Dynamic fund manager’s robust, bottom-up stock picking approach, and the manager has a deep knowledge of companies, supported by a strong screening and risk management process. Of course, this is a value fund, and the manager’s style has struggled recently as investors have chased growth stocks even higher. To gain exposure to equity regions, my team blends active managers with different styles (who are therefore likely to outperform at different times). This gives us an opportunity to add to underperforming managers like this one, when we have conviction around the process and ability of the manager over the long-term.

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