What to buy, what to sell: Choosing a fund from the UK All Companies sector
By
Annunziata Rees-Mogg
Mar 23, 2006
With nearly 300 funds in the UK All Companies sector, how on earth should investors go about choosing one? asks Paul Farrow in The Sunday Telegraph. It isn’t easy, but the first thing to note is that there are some “serial duds” to avoid. According to advisers Dennehy Weller & Co, these include L&G Managed, Canada Life Growth, Axa UK Growth and Royal London Growth – all of which have underperformed for far too long to be given any more chances.
So, those discounted, what next? Think about style, says Farrow. Until recently, the big money was to be made investing in stocks that offered investors high levels of income. However, over the last year there has been something of a shift: today, UK fund managers are increasingly turning to low-yield growth stocks in their search for returns.
Another thing to bear in mind, says The Times, is the extent to which fund managers consider themselves to be either “bottom up” or “top down” investors. The former like to think they concentrate on identifying individual shares with potential, regardless of what is going on in the economy or relevant sector as a whole, and the latter consider mainly the state of the overall market and economy before deciding how to invest. In an ideal world, you want to give your money to a manager who understands that both approaches are important. As Ed Burke of Invesco Perpetual UK Aggressive Fund says, “you can’t pick stocks in a vacuum”.
Two managers currently setting a good example in this respect are Andrew Green, who runs the GAM UK Diversified fund, and Mark Hall, who runs the Rensburg UK Select Growth fund. Asked by Paul Farrow to pick a favourite fund, Jason Britton of T Bailey also pointed to Mark Hall’s “consistent and impressive” management, but his “strongest recommendation” goes to Old Mutual UK Select fund.
Other experts approached by Farrow included Mark Harris of New Star. He tipped Merrill Lynch Dynamic fund, as it combines “excellent stock picking with good risk controls”, and SWIP UK Opportunities fund, a “relatively small and unknown” fund that should do well this year now that large and mid-sized firms have started to outperform smaller companies in the UK.
Gary Potter of Credit Suisse told Farrow he would go for Saracen UK Growth fund, a fund run by Jim Fisher, who over the last three years has managed to outperform even investment guru Anthony Bolton of the Fidelity Special Situations fund. Walker Cripps UK Growth fund, managed by Jan Luthman, is also a “star performer” that’s well worth looking at.
Published in Investments
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by
Annunziata Rees-Mogg
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