What to buy, what to sell: Global growth funds and discounted investment trusts

published 8 June 2006

Global growth funds hit hard by rocky markets

Global growth funds have been hit hard by falling equity markets in the last month and none more so than those with large holdings in commodities and emerging markets. It was investment in these areas that propelled the funds' stellar growth in the last year, says Citywire.co.uk, but since the start of May, "only one of the top ten managers in the preceding year has avoided being at the helm of a fund that underperformed its peer group". That fund was New Star Tactical Portfolio Fund, managed by Citywire A-rated Mark Harris, which produced a return of 3.5% in May against 4.2% for the average global-growth fund in that month.

However, not all fund managers in Citywire's top ten for the year to the end of April fared as well in last month's falls. The Neptune Multimanager Growth Fund, run by second-placed manager Robin Geffen and 11th-placed John Husslebee, tumbled 5.5% in May. Geffen's other global growth fund, Neptune Global Equity fell 5.7%. Citywire AA-rated John Charfield-Roberts saw his Jupiter Merlin Portfolio plunge 6%, while Rathbone Global Opportunities was the worst faller of all of the top ten managers. It lost 7.2% in May, compared with the 59.36% return it made in the preceding year. The next worst was Citywire AAA-rated Andrew Dalrymple's First State Global Opportunities fund, which was down 7% against 70.9% for the year to the end of April.

Investment trusts trading at large discounts

If you're still a bull, you could take a look at investment trusts, many of which are now trading at larger discounts than before the market fell. When a trust's share price falls below the value of its assets, it trades at a discount, and the recent falls have caused those discounts to widen.

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The analyst team at WINS Investment Trusts recommend the following in The Daily Telegraph: Schroder Asia Pacific has an impressive track record, and at a discount of 9.7% is at its widest for some time, and Fidelity Special Values (discount 4.7%), managed by Anthony Bolton, has lower charges than the equivalent open-ended fund. Others include JPMF Japanese (discount 8.9%), TR Property (discount 8.6%) and Merrill Lynch World Mining (discount 12.8%).