The first fund he nominated is SVS Church House Tenax Absolute Return Strategies.
SVS Church House Tenax Absolute Return Strategies
McDermott commented, ‘Church House is a small boutique fund house run by two very experienced managers. This fund is a very useful portfolio diversifier and one of just a few in its sector that targets an absolute return from diversification and risk management alone, rather than short selling. It invests directly in different assets, rather than using the fund of funds route, with the managers looking for low correlation and low volatility in the fund’s overall value. The managers will invest in fixed interest, equities, property, alternatives and cash, with limits on exposure to each and they believe that the only risk that matters is the risk of an investment falling in value. It’s a great core fund for investors who are either new to investing or cautious in their approach.’
This £74 million fund has delivered a positive return in every one of the past five years,
The second fund nominated by McDermott is the Guiness Global Equity Income fund.
Guinness Global Equity Income
McDermott said, ‘This fund typically consists of around 35 equal-weighted stocks, which means that investments are very different from the benchmark index and the managers have substantial freedom to entirely avoid countries and sectors they don’t like. Shares are generally held for three to five years with the managers focusing on how well and consistently a company can use money to generate returns. It has been co-managed since its launch in 2010 by Matthew Page and Dr. Ian Mortimer, who both studied physics at Oxford, which they attribute to being why they have a natural preference for good metrics rather than good stories. They target those companies consistently creating value for shareholders through an entire business cycle. The managers use a one-in, one-out philosophy when it comes to adjusting the portfolio. This means the fund stays up to date with the managers’ best ideas, because they have to consider the worst of their investments, rather than simply adding a position. We think this is a core global income holding.’
This fund has returned 88 per cent over the past five years.
McDermott’s final choice is the Axa Framlington UK Select Opportunities fund.
AXA Framlington UK Select Opportunities
McDermott said, ‘The manager of this fund, Nigel Thomas, is a fund management veteran with more than 30 years’ experience. During this time he has built up a formidable reputation. A pragmatic stock-picker, he has managed this fund since 2002, looking for both growth and value opportunities across the market-cap spectrum. Company meetings are a crucial part of the process. By his own very modest admission, he doesn’t do anything that is unique, but he does wear out a significant amount of both intellectual and physical shoe leather with his team, unearthing opportunities. Nigel has used the flexibility of the fund’s mandate expertly to deliver strong returns across a wide of market conditions and rightly deserves his reputation as one of the best fund managers in the UK in our opinion. We regard him as one of the safest pairs of hands around.’