FUND SELECTOR THEMATIC FUNDS
Top ranked funds Assets under management
Top 3 AUM funds vs world index
100
80
60
40
20
%
0
-20
-40
CLOSED-ENDED FUNDS
Closed-ended funds are typically a good place to invest in new
themes. Overseas property, hedge funds and infrastructure are three
of the main growth areas in recent years.
Recent thematic launches include small-cap resource companies
(Altus Resources and Golden Prospect), complementing New City
Energy. Other funds in the sector are in the pipeline, and join the
sector behemoth that is BlackRock World Mining. The largest
new fund launch of late was Impax Asian Environmental Markets,
investing in stocks benefiting from a growing need for services
such as waste processing, water treatment and power generation in
the region. This complements the well-established BlackRock New
Energy, Jupiter Green and Impax Environmental Markets funds
in the sector.
Infrastructure has been a growing theme for some time, and
investing in the likes of HSBC Infrastructure, International Public
Partnerships or 3i Infrastructure is an easy way of accessing the
sector – something pension funds are beginning to recognise.
One can invest in the wider utilities sector via the likes of Utilico
Emerging Markets, Premier Energy and Water or Ecofin Water and
Power. Many of these offer zero dividend shares for those who
understand and appreciate that particular type of investment.
Other areas of interest include Asian markets such as Vietnam
and China, both well covered by closed-ended funds. Vision
Opportunities China is focused on domestic growth stories in
that country, and remains on a 40% discount despite excellent
performance from its underlying holdings. Cautious investors may
wish to consider the pharmaceutical or biotech sectors, where
Finsbury Worldwide Pharmaceutical gives the broadest coverage.
Finally, technology can be accessed through three different funds,
each of which has their own strengths and weaknesses. Our favourite
is RCM Technology but Polar Capital’s trust is larger and therefore
easier to invest in.
Stephen Peters, investment trust analyst, Charles Stanley
MSCI World
-60
Feb ’07 Aug Feb ’08
Source: Morningstar
Aug
BGF World Mining A2 $
BGF World
Energy A2 $
Feb ’09
Top 10 thematic funds by assets under management
To 6 Jan ’10. Bid to bid, £, gross income, no cap. Source: Morningstar
BGF World Gold A2 $
Aug
Feb ’10
FUND ANALYSIS
■ Baring Global Resources, run by Jonathan Blake, recently
increased its exposure to the base metals sector, funded by a
reduction to the energy sector.
■ Within base metals, Blake added to copper, which he says
remains a fundamentally tight market given the ongoing supply
constraints, and to steel as demand should continue to improve
within both Europe and the US.
■ Blake believes we are entering a strong period for fertiliser
demand ahead of the northern hemisphere planting season.
FUND PICKER’S COMMENT
ROSS BROOKES,
COLLECTIVES ANALYST,
CHARLES STANLEY
The BlackRock Gold &
General Fund seeks investments
in gold companies
with growth potential both
at their existing operations
and via green field exploration.
The manager will
maintain a low exposure to
pure exploration plays and
the fund is managed using
a blended approach with
no discernible style bias.
Research is conducted
on a global basis and an
assessment of the quality
of a company’s ore reserves
is a key component of the
evaluation process. While
the process majors on valuation
as the primary consideration,
a top-down
macro overlay is used.
Long-term performance
of this fund has been excellent
in both rising and falling
precious metal
markets.
Philip Gibbs has successfully
managed the
Jupiter Financial
Opportunities Fund since
inception and offers an
exposure to all areas of
financial services and property-related
securities. The
Top funds by AUM – 3-year risk/return
3-year 3-year 3-year 3-year 3-year Morningstar Fund Domicile
% chg Alpha Beta R² volatility Rating size ($m)
BGF World Mining A2 $ 59.12 1.34 1.34 0.46 11.05 ★★★ 7,901.78 Luxembourg
BGF World Gold A2 $ 77.36 1.93 0.85 0.16 12.15 ★★★★ 4,408.69 Luxembourg
BGF World Energy A2 $ 35.03 0.76 0.9 0.48 7.32 ★★★ 2,418.37 Luxembourg
BGF New Energy A2 $ 9.05 0.21 1.33 0.67 9.13 ★★★ 2,346.27 Luxembourg
BlackRock Gold and General A Inc 80.2 1.89 0.83 0.17 11.24 ★★★★★ 2,132.88 UK
JPMorgan Natural Resources A Acc 49.91 1.19 1.16 0.38 10.63 ★★★ 1,814.50 UK
Jupiter Financial Opportunities 25.49 0.54 0.45 0.32 4.46 ★★★★★ 1,422.75 UK
JPM Global Natural Resources A (dis)-€ 41.16 1.02 1.21 0.39 10.93 ★★ 1,363.72 Luxembourg
Baring Global Resources 19.64 0.58 1.08 0.41 9.44 ★★ 1,239.43 Ireland
PF (LUX) Biotech P Cap 17.5 0.53 0.53 0.22 6.37 ★★★★ 1,054.55 Luxembourg
Return (%)
100
80
60
BlackRock Gold and General A Inc BGF World Gold A2 $
BGF World Energy A2 $
BGF World
Mining A2 $
40
Jupiter Financial
Opportunities
JPMorgan Natural
Resources A Acc
JPM Global Natural
20
Resources A (dis) €
Baring Global Resources
PF (LUX)
0 Biotech P Cap Sector average BGF New Energy A2 $
3
6 9
Standard deviation (%)
12 15
To 6 Jan ’10. Bid to bid, £, gross inc, no cap. Source: Morningstar
fund is managed with a
heavy top-down influence
with Gibbs assessment of
the macroeconomic environment
the key to determining
the themes he
believes have the most
potential. Stock selection
will be focused on companies
whose growth potential
is not yet priced correctly
by the market.
The skill of the manager
has been in his ability to
protect capital in market
environments that have not
favoured financials. During
the height of the credit
crisis Gibbs was negative
on the short-term outlook
for his sector but pared the
extent of investor losses by
cutting his net equity exposure
in favour of cash and
bonds.
In terms of strategy, he
is cautious about the UK
government’s debt position
and this is reflected in the
portfolio. It maintains a
bias towards businesses
whose focus is towards the
Far East where economic
growth is stronger. The
recent re-hire of Guy de
Blonay further strengthens
what is an already
immensely strong team.
Performance of the JPM
Natural Resources fund has
been excellent over time.
The fund will include
investments in companies
from the discovery stage to
reserve definition with an
emphasis on those possessing
a strong and growing
market share, healthy
profit margins and the
potential for a rerating.
In addition, the team
will also seek to uncover
stocks with valuation
anomalies. The fund will
have a heavy exposure to
mid and small-cap names
and is broadly spread by
both sector and individual
stock.
There is a huge infrastructure
spend from
emerging market economies
and fund manager,
Ian Henderson, believes
commodities prices will
continue to rise over the
longer term.
46 PORTFOLIO ADVISER [www.portfolio-adviser.com] MARCH 2010
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