Looking for fund ideas to add your portfolio? Morningstar analysts positively rate the funds they think will outperform peers over the medium to long-term based on five criteria; the fund manager, the parent company, past performance, the investment process and the fund’s annual charge.
The highest rating that can be bestowed on a fund is the Gold Rating – although this is not a “buy” recommendation. It is up to the individual investor, or their financial adviser, to decide on the best asset allocation to meet their investment needs. First you decide which asset class, geographical region or sector exposure you want – then you can use Morningstar ratings to find the best possible fund for you.
These five funds are among the few which are currently Gold Rated, plus have secured a five-star performance rating, meaning they have outperformed their peers over a rolling-three-year basis. Note that this does not mean they have delivered the best performance across the entire fund universe, indeed they could have lost money in the past three years, but they are the best in class.
BlackRock Gold & General
This troubled fund was hit hard when commodity prices tanked a few years ago – but within its sector it is one of the best performers and Morningstar analysts have faith in the manager Evy Hambro’s consistent approach and longer-term track record.
Morningstar analyst Fatima Zhizou says this fund remains a strong offering for investors seeking mainstream gold and precious-metals equity exposure in a risk-controlled manner.
“The long-term record indicates Hambro has been successful in adding value by applying the outcome of the team’s detailed commodity and company analysis in a risk- and liquidity-aware manner,” says Zhizou.
Comgest Growth Europe
This long-term investment strategy is managed with the highest level of expertise, says Morningstar analyst Mathieu Caquineau.
“This fund’s approach is solely focused on quality companies capable of growing independently of the economic cycle. These companies generally have a dominant commercial position, solid management, and a sound balance sheet”, says Caquineau. “Stocks belonging to the most cyclical sectors, including financials, are therefore deliberately excluded. Conversely, the team favours sectors in which companies have a strong competitive advantage like health care or technology.”
Dodge & Cox Worldwide Global Stock
Investors who share the managers’ patience and long-term investment horizon have been well served thus far, says Khizou of this Gold Rated fund.
“Dodge & Cox launched this global fund in 2009. While that's a relatively short track record to achieve our highest Morningstar Analyst Rating of Gold, a mirror global fund sold in the US has been running since 2008, a global ex-US fund was launched in 2001, and a US equity fund has been in existence for even longer,” she explains.
“We list these funds because in addition to their excellent records, there is considerable overlap between them in terms of the stocks and the named managers, who apply the same investment process across all Dodge & Cox strategies.”
Schroder Tokyo
Schroder Tokyo is one of the strongest funds for Japanese equities Morningstar fund analysts cover, says Peter Brunt.
“Manager Andrew Rose has run Japanese-equity portfolios since the 1980s and is one of the most experienced equity managers in the peer group,” continues Brunt. “He is supported by a strong team of analysts and portfolio managers based in Tokyo, which he headed until he moved back to London in 2006. We believe he is adept at using the resources to his advantage, and the quality of the group’s in-house research capability gives it an edge.”
Veritas Global Focus
“Veritas Global Focus remains amongst the strongest offerings in its sector,” says Morningstar’s Muna Abu-Habsa.
“A major strength of this fund is its management. Charles Richardson and Andrew Headley, who previously worked together at Newton, have been at the helm since the fund was launched in 2003. The fund’s standout characteristic is the extent to which the managers aim to deliver real returns to investors. Indeed, preservation and growth of capital are considered to be of more importance than benchmark risk, and the portfolio is managed with little regard to an index.”
