Morningstar's "Perspectives" series features investment insights from third-party contributors. This week as part of our Guide to ISA Investing we reveal the top rated and top performing stock and fund ideas – as well as sharing where the experts stash their cash, the latest news from the 2017 Budget Report and how to reduce your tax bill.
As the deadline to use your annual ISA allowance approaches, Marcus Brookes, head of multi-manager at Schroders, highlights four funds he is backing for his portfolios.
Artemis Global Emerging Markets Fund
Despite some resurgence in 2016, emerging markets have underperformed developed markets over recent years, and it is an area we had been avoiding. We have chosen to dip our toes back in the water as we think the region is continuing to become more attractive. One of the funds we like in this area is the Artemis offering, managed by Peter Saacke and Raheel Altaf, using the firm’s “Smart GARP” approach.
The fund is not too big and cumbersome, which gives it added flexibility to invest across the emerging markets spectrum, and it has a strong team behind it. We think it is a good option for playing the improvement in emerging market fundamentals.
Hermes Asia ex Japan Equity Fund
Many investors have been concerned about China’s ability to maintain its growth, which had led to them reducing their exposure to this area. While we share some of these worries longer-term, for now we feel that it might be prudent to add back to positions. Our chosen fund for this purpose is the Jonathan Pines-managed Hermes Asia ex Japan Equity fund. We like this fund as the manager has a strong value-biased philosophy, something that we feel could lead the market for a while yet.
Furthermore, the fund has already enjoyed some success but careful capacity management means we remain hopeful that it will not get too big, allowing it to continue its impressive performance.
Invesco Perpetual European Equity Fund
Europe is an area that seems to have been in the eye of the financial storm since the crisis began in 2008. We have begun to see a modest pickup in the economy and profits forecasts; while politics may be dominating investors views of the continent, perhaps it is still worth adding to this area.
Our preferred fund here is the Invesco Perpetual European Equity Fund, managed by Jeff Taylor and his team. The manager has selected a portfolio of shares that target the cheaper areas of Europe, including a reasonable exposure to European financials, an area that we believe could find favour once the political distractions are out of the way.
Schroder Strategic Credit Fund
The global economy appears to have picked up over the course of 2016, resulting in return of inflation, albeit from very low levels. Historically inflation has led to poor returns for fixed income investors, but this is an area that many rely on for income.
We believe the Schroder Strategic Credit fund may be a good fund for income-seeking investors who are worried about the possibility of interest rates rising at some point. Peter Harvey has managed this fund successfully for in excess of 10 years, ensuring that the portfolio keeps its sensitivity to rising rates really low.
Disclaimer
The views contained herein are those of the author(s) and not necessarily those of Morningstar. If you are interested in Morningstar featuring your content on our website, please email submissions to UKEditorial@morningstar.com
