Investors seeking ideas for collectives to stash in Christmas stockings are in luck, as the stockbroker Brewin Dolphin has unveiled its top fund picks for 2018.
Led by Ben Gutteridge, head of fund research, the team has identified six regional ideas and a fixed income pick to pique the interest of portfolio builders.
Starting with UK-focused investing, Gutteridge says that ‘targeting those strategies that provide a premium level of growth at attractive prices, otherwise known as ‘GARP’, should make for a sound investment strategy in 2018.’
MAN GLG UK INCOME
In this vein, Brewin Dolphin’s pick here is the Man GLG UK Income fund managed by Henry Dixon, whose underlying characteristics include ‘both growth and value features and within those value characteristics a premium dividend yield to the market.’
Examination of the top 10 reveals names such as oil giant Royal Dutch Shell (RDSB), cigarettes titan British American Tobacco (BATS), housebuilder Bellway (BWY) and Green REIT (GRN) nestling in the portfolio.
‘The fund targets companies already uncovered by the team’s undervalued assets process in addition to a focus on companies with materially stronger balance sheets where the potential for dividend growth is high,’ adds Gutteridge.
LEGG MASON US SMALL CAP OPPORTUNITIES
For those seeking some New Year upside stateside, Brewin Dolphin’s preferred fund is Legg Mason US Small Cap Opportunities’, a fund that’s been on the stockbroker’s best buy for five years.
‘The management have a clear value bias allowing them to benefit from any upside surprises to US economy performance,’ says Gutteridge.
JOHCM CONTINENTAL EUROPEAN
Paul Wild-managed JOHCM Continental European, which pursues ‘a flexible, dynamic approach that incorporates top-down views with bottom-up stock-selection’, is Brewin Dolphin’s Europe sector selection.
‘Wild will be quite fast moving if the macro environment changes, as he was in the latter part of 2016 when he moved the fund to have a greater cyclical positioning to catch that rally,’ explains Gutteridge.
‘The portfolio is constructed so that the strategy delivers gentle outperformance of the benchmark and nasty surprises are a rarity with this fund,’ says Gutteridge, which ‘stands out amongst other funds for having a value bias' and whose top 10 positions span Bayer to Banco Santander.
BAILLIE GIFFORD JAPANESE
One of 2017’s big people-related news stories was the retirement of Sarah Whitley as head of Baillie Gifford’s Japanese equity team.
Following 37 years in the industry, the Baillie Gifford lifer announced she’ll retire in April next year, although Brewin Dolpin’s analysts still believe the Baillie Gifford Japanese fund, invested in Softbank and Toyota Motor, can perform strongly in 2018.
‘Over the years she has built up a relatively large team all well versed in the Baillie Gifford investment philosophy of long term, patient, benchmark agnostic, investing in companies with above average growth prospects,’ explains Gutteridge.
‘As such we do not expect much to change. The portfolio will continue to be made up of companies with attractive industry backgrounds, strong competitive positions, high quality earnings and management with favourable attitudes towards minority shareholders.’
STEWART INVESTORS ASIA PACIFIC LEADERS
Brewin Dolphin also shines the spotlight on its key selections for the Asia ex-Japan, emerging markets and fixed income sectors respectively.
First up is Stewart Investors Asia Pacific Leaders, ‘a more defensive strategy which has lagged the equity market over the last few years’.
The fund manager, David Gait, looks to create a portfolio of very high-quality companies, in growing industries, which are run by exceptional management teams,’ says Brewin.
FIDELITY EMERGING MARKETS
In the often volatile emerging markets space, Brewin Dolphin is backing another fund with a defensive orientation, namely the Nick Price-steered Fidelity Emerging Markets, whose strategy ‘places greater emphasis on finding secular growth stories, far less vulnerable to the ebb and flow of Chinese or indeed global growth’.
ROBECO GLOBAL CREDIT
Last but not least, Robeco Global Credit emerges as Brewin Dolphin’s fixed income suggestion.
Investing in global corporate bond markets with a focus on investment grade, ‘this high-quality core is then complemented by high conviction ideas and value opportunities, which are sourced from a wider market and include speculative grade bonds, asset backed securities and emerging market debt.'
