Jonathan Miller: Welcome to the final Morningstar Manager Check-up of 2017, where we share with you an update on three funds.
A fund that’s had a tough time of late, but still have a high opinion of, is JOHCM Asia ex Japan. The manager, Samir Mehta, impresses us with his detailed stock views and willingness to back his own convictions. Then the process he employs has proved its worthiness over time, and we’re confident that it will continue to deliver. The focus is on finding firms that can deliver sustainable long-term growth, an ability to consistently generate high returns on capital, and resilience during economic downturns.
The end portfolio is truly index-agnostic with a structural bias towards areas such as telecoms, gaming, healthcare, and consumer-related names. The fund’s underperformed this year and last year, partly due to not being exposed to more growth oriented stocks. That said, we’re not unduly concerned as we believe in the manager and his tried-and-tested process, so we restate the fund’s Morningstar Analyst Rating of Silver.
The Newton International Bond fund is led by Paul Brain who brings more than 30 years’ experience as a fixed-income investor. He’s head of a 10-strong team that employs a "thematic" approach for idea generation. The opportunity set is mainly G-10 government bonds and currencies. It’s important to note that this fund is different to many global bond peers, in that it doesn’t invest in corporate bonds, so it can be a bit tricky to make comparisons.
Outperformance over the long term is mainly centred around adjusting the portfolio’s sensitivity to interest rate movements and yield-curve positioning. Our conviction is underpinned by the manager’s significant experience and effective execution of the team’s process. On a risk-adjusted basis, the fund has moderately outperformed its benchmark and it holds a Morningstar Analyst Rating of Bronze.
In the investment trust space, City of London (CTY) has had a manager at the helm for 26 years. This is exceptionally rare and under Job Curtis, we see investors as being in safe and accomplished hands. The process is little changed over that time, too. "Conservative" is a moniker that permeates through the management of the trust, and Curtis is naturally a cautious, mildly contrarian investor. He doesn't ignore the macro picture, but the bulk of his analysis is done from the bottom up. The primary focus is dividend yield as a measure of value, together with balance-sheet scrutiny to ensure robustness, continuity, and growth in distributions. The prudent and measured approach to portfolio management has resulted in outperformance over most time frames. We believe the combination of an exceptionally experienced and stable management team, a consistent process and very low fees, make this a compelling option, meaning it holds a Morningstar Analyst Rating of Gold.
That’s it from us for this year. We’ll be back in 2018 and it just leaves us to wish you a Merry Christmas and a happy and healthy New Year.
