Finding decent returns in developed markets can be tricky but Japan looks interesting after a long period left on in the cold due in part to unwieldy corporate structures of its companies. Japanese firms are now becoming more shareholder-friendly and Joe Bauernfreund, manager of this investment trust, rejigged the portfolio in 2017 to include a larger allocation to the country’s equity market.
Emerging markets can offer scope for considerable capital gains, but investors must recognise this can be a volatile part of an investment portfolio, which is why it is crucial to invest using an experienced manager. Fidelity’s fund will typically hold about 75 stocks although fund manager Nick Price can own up to 120 stocks at any given time.
The top holdings include relatively well-known names such as South Africa’s internet and media company Naspers, Taiwan Semiconductors and Alibaba. Less known among the top holdings include Russian bank Sberbank and Inner Mongolia Yili Energy.
Oil prices have moved materially higher in 2018 which has positive implications for the oil industry. Launched in 2008, this specialist energy fund has around half of its assets in the US, 15% in Canada and a little over 10% in the UK, providing genuinely global exposure to the industry.
Among its largest holdings are the big US oil services firms Haliburton and Schlumberger alongside producers like Chinese state operator CNOOC and Canadian firm Suncor Energy.
Fund managers Tim Guinness, Will Riley and Jonathan Waghorn believe improving free cash flow from the sector should see companies trade at a higher multiple of the value of their assets.
Royal London UK Equity Income, which trades on an historic yield just short of 4%, has been managed by Martin Cholwill since 2005. It is a top quartile performer on a three and five-year view. Cholwill focuses on companies with robust balance sheets which are sufficiently out of favour to enable them to be bought at a higher yield than that offered by the wider market.
This approach could benefit as investors turn their attention from how rapidly earnings are expanding to how much they are paying to gain access to these earnings – or in other words from growth to value.
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