Ideas for your ISA: five ‘hidden gem’ funds to consider
With more than 3,000 funds available in the UK, choosing one can be difficult and so investors may be tempted to stick with well-known brands or names.
However, independent fund ratings agency, FundCalibre, says this strategy could mean you’re overlooking some lesser-known, but equally good funds and fund managers.
FundCalibre has shared five hidden gems which all have its ‘Elite Rated’ stamp of approval. This means the funds have undergone “comprehensive analysis” and the FundCalibre experts believe the manager can consistently deliver “positive value over time”. All of these fund picks have less than £100m under management.
Here’s the top five list:
Legg Mason Global Equity Income
This fund is jointly managed by Paul Ehrlichman, Sean Bogda and Safa Muhtaseb. It has a unique proven process, which combines an initial quantitative screen, followed by a close look at each individual stock. Companies with declining dividends or competitive positions, weak management or poor industry conditions are immediately eliminated and, of those left, only companies trading well below their normal valuations are chosen. FundCalibre says it likes the fact the managers have the courage to be both contrarian and radically different to their benchmark, with more than 60% invested in small and medium sized companies.
T. Rowe Price European Smaller Companies Equity
The fund is pan-European, investing around 30% in the UK. Its manager, Ben Griffiths, is highly experienced, with a proven track record of managing small and mid-cap portfolios in Europe. The universe is under-researched by most major investment houses, giving the team plenty of scope to find unloved and undervalued companies. Buying early or in a contrarian fashion, with a long-term view, Thomson to compound his winners. His enthusiasm for small-cap investing is evident, FundCalibre adds.
SVS Church House Tenax Absolute Return Strategies
Church House is a small boutique house run by two very experienced managers. This fund is a very useful portfolio diversifier and one of just a few in its sector that targets an absolute return from diversification and risk management alone, rather than short selling. It invests directly in different assets, rather than using the fund of funds route, with the managers looking for low correlation and low volatility in the fund’s overall value.
Liontrust Macro UK Growth
The core philosophy of the fund is that macro-thematic analysis and the identification of economic, political and social developments are key to outperformance. The fund focuses on major factors affecting the world, such as global warming, globalisation, ageing populations and quantitative easing. The managers also focus on negative themes to avoid certain sectors. As a result, they don’t own any incumbent banks, utility or tobacco companies. Each theme is capped at 20% of the portfolio so that no one idea dominates and it has a bias towards large and mid-cap companies.
F&C Real Estate Securities
Investors can gain access to property securities listed in both the UK and Europe through this fund. The managers see real estate as an income stream with a ‘capital kicker’. They look at the macroeconomic situation first for each sector, then look at individual stocks. They also have the flexibility to short companies if they want to. This is a big positive given the relatively small size of the investment universe.