Each week, a professional investor tells MoneyWeek where he'd put his money now. This week: Jerry McLoughlin, director at Punter Southall Financial Management.
In these times of extreme uncertainty it has become increasingly hard to know which funds and managers to pick. It is more essential than ever to understand the philosophy and holdings behind such investments. At Punter Southall Financial Management we have consolidated our main fund choices, focusing on good-quality fund managers with transparent investment techniques.
Tom Dobell has managed the M&G Recovery Fund (0800-390390) since March 2000. The fund aims to achieve capital growth by investing in out-of-favour firms and seeing them through the recovery cycle. Dobell gets actively involved in these firms and only invests in those he understands, with management teams who are open and honest. What we like most about the fund is that Dobell comes across as a man you would trust with your own money. The fund fits well in portfolios as a core UK equity holding.
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Jupiter Merlin Growth Portfolio (020-7314 7600) is managed by a long-standing star' team headed by John Chatfield-Roberts. The fund invests in UK and international equities, fixed-interest stocks, commodities and property. It's an actively managed, concentrated, multi-manager fund of funds from leading fund groups such as Invesco Perpetual and Fidelity.
The fund seeks long-term capital growth with the aim of outperforming the FTSE APCIMS Growth Index and the IMA Active Managed sector over the medium to long term. The aim is to buy into liquid investments so that managers have flexibility to deal with uncertain times.
Leading ratings agencies Standard & Poor's and OBSR each give the fund the top AAA rating and it has produced top-quartile performance over the five years to 31 October, while being ranked six out of 84 in the actively managed peer group.
The fund team has a robust strategy that has demonstrated the strength of the Merlin range over the last 11 years. This combines long-term, top-quartile performance with managed volatility in a sector exposed to greater-than-average levels of risk. We approve of their philosophy of preserving capital in tough times, while remaining appropriately positioned to benefit from a recovery.
Equity income-seeking investors who want to diversify away from the UK should consider the Newton Global Higher Income Fund (020-7163 9000). It's been run by James Harries since launch in November 2005. Harries is A-rated by Citywire and the fund has a four-star rating from Morningstar. Harries aims to beat the total return of the FTSE World index and provide a dividend yield that is higher than the benchmark. The portfolio typically consists of 65-75 stocks that have good products and are attractively priced.
A major theme is Asia and emerging markets, where the fund currently holds 30%. Harries believes these higher-risk countries are well positioned with young, increasingly well-educated populations, solid banking systems and robust currencies. Its performance since launch has been excellent, returning 33.37% against the Global Growth sector average of 9.13%, according to Lipper. We consider the fund a strong buy for growth investors and those looking for long-term income generation.
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