Two new investment funds to watch

Two members of our independent panel examine two investment funds launched this summer and assess what they have to offer investors based on cost, terms and conditions and investment potential.

 Two new investment funds to watch

Choosing an investment fund

Schroder Indian Equity fund

Chase de Vere’s Patrick Connolly, chartered financial planner at IFAs Chase de Vere, highlights a fund focusing on India’s compelling if volatile potential.

There is a compelling long-term growth story for investing in India. It is on its way to becoming the world’s fifth largest economy and could move up to second, or even first, place in the coming decades. We have seen strong stock market returns and the environment is still positive with the re-election of Modi, which was welcomed by markets, inflation under control and structural reforms taking place.

The Schroder Indian Equity fund adopts a growth style, looking to invest in good quality companies and benefit from the Indian domestic growth story. It is a high conviction fund, holding between 30 and 45 stocks, with a low beta meaning it should stand up better than some other Indian funds in difficult market conditions.

Schroders is well-equipped to manage this fund, having vast research resources and utilising its relationship with Axis AM, which has 11 investment professionals in India.

The fund will be run on a similar basis to the existing Indian-domiciled Axis Long Term Equity fund and the Luxembourg-domiciled SISF Indian Opportunities fund. Both have performed well but have been volatile, as you would expect from a concentrated portfolio. Ongoing charges of 0.9% are quite high, but typical for a specialist fund.

However, we must remember that this is a volatile area. There is much work to do in terms of economic reforms and other issues need addressing, including transport and energy improvements; and there always seem to be the potential for political risks.

The fund seems a reasonable choice for those who want specific exposure to India but, because of the risks, many investors are better-suited getting exposure through more diversified emerging markets funds.

I give it 3 out of 5.

Artemis Short-Dated Global High Yield Bond fund

Darius McDermott, managing director, Chelsea Financial Services, looks at a fund headed up by a well-regarded bond team

Artemis has launched a short-dated global high yield bond fund for the team of managers it has hired from Kames Capital. The fund will aim to deliver returns in excess of cash over rolling three-year periods.

The team from Kames includes David Ennett and Stephen Baines, who will be supported on the fund by Juan Valenzuela and, upon their arrival at the asset
manager, Jack Holmes and Stephen Snowden.

The fund is a concentrated portfolio of 75 to 100 short-dated high yield positions from around the globe. The fund is similar to the fund the team ran at Kames.

Artemis announced the appointment of the Kames Capital bond team late last year, this included Snowden, who was co-head of fixed income at the firm.
Short-dated bonds take out some of the interest rate risk fixed income assets face.

In the case of high yield bonds, they also take out some of the credit default risk, as the shorter time frame should give the managers more confidence in the immediate outlook for the company, and the likelihood that it will meet its debt obligations.

This is a well-regarded bond team in the investment industry, and I would expect more fund launches to come in the future.

I would rate it 4 out of 5.

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time.
Darius McDermott’s views are his own and do not constitute financial advice.

Related: Two Sustainable Investment Funds to Watch

Comments (0)