In 2014, the economic growth that started just over a year ago looks set to continue. We expect equities to outperform other asset classes, with property, bonds and commodities still facing challenges of rising interest rates and China’s slowdown.

This positive perspective on equities could remain that way for some time, with inflation and its associated risks looking quite a way off.

Given this positive outlook on equities, it is important to identify the managers who are capable of making the most of this market. We’ve searched for managers for our Undiscovered Talent fund who look set to deliver good results over time.

Alken Asset Management – Nicolas Walewski

Nicolas Walewski is the managing partner at Alken Asset Management, an independently owned firm established in 2005. He is the founder and lead portfolio manager of a fund of funds at Alken. Previously, Nicolas was the fund manager of the Oyster European Opportunities Fund at Banque Syz in London from 1999 to 2005.

While Alken has fairly substantial assets under management, their boutique status means that they are little known outside the institutional world. The team’s investment style focuses on the analysis of individual stocks across the full spectrum of company sizes. Analysts have free reign to generate investment ideas within their defined sectors and so have the luxury of being able to spend as much time as necessary getting to grips with an investment.

Heronbridge UK Equity – Bevis Comer and Benoit Bouchaud

Heronbridge was established in November 2005 by two investment professionals, Bevis Comer and Benoit Bouchaud. There are now four investment managers, situated in a town house in the centre of Bath, working for this boutique firm. They concentrate on one particular strategy which now has a solid track record and has attracted institutional money in recent years.

The investment team seeks to identify ‘good companies at fair prices’ and ‘fair companies at good prices’. Philosophically, the process is grounded in Warren Buffett’s concept of ‘owner earnings’- a valuation method that suggests the value of a company is simply the total of the net cash flows (owner earnings) expected to occur over the life of the business, discounted by an appropriate interest rate.

Somerset Capital Management, Global Emerging Markets – Dominic Johnson

Somerset Capital Management was founded in 2007 as a specialist global emerging markets investment management firm. The team’s investment process focuses on selecting well-managed, cash-flows generative companies. Their portfolios tend to have a quality and relative value bias.

The investment team originally worked together at Lloyd George Asset Management, which is an established player in GEM and Asia Pacific, but wanted to set up on their own because they wanted a bigger stake in ownership. They have hitherto focused more on institutional business, and this particular retail fund is still pretty small (also because it has had performance issues in the past). We think the team is good and performance is explicable.

Barings Japan Growth Trust – Raya Chebli Kos

Barings Japan Growth is run by Rya Kos as the lead manager. With Jon Greenhill, she has been running fund for about four years (since it was brought back onshore). Both Raya and Jon have extensive experience of covering Japan companies. The team take an opportunistic approach to research and focus is on in-depth analysis of companies especially at the financial level to identify the greatest value creators over time. The focus is on bottom-up analysis to identify where market earnings estimates are too low. The team call this the ‘perception gap’. The fund has an all-cap focus but tends to have a mid/small bias and is a relatively concentrated.

While Barings is a well-known fund house, this team took over the fund four years ago and have a good track record but have not yet gathered many assets – so they are ‘undiscovered’ because they are as yet unnoticed by the wider market.

JO Hambro – Samir Mehta and Cho-Yu Kooi

The managers believe that there are pricing inefficiencies in Asian stock markets, particularly at the individual stock level. Both fund managers have approximately twenty years experience working in Asia and have spent almost half their investment careers working together. The team has a proven ability to generate outperformance in both rising and falling markets. With the region’s history of positive but volatile returns, this is key to delivering consistent outperformance to investors.

We consider this manager ‘undiscovered’ on the basis of their decision to limit capacity in their Asia ex-Japan strategy to $2.5bn and to focus on broad regional mandates.