Next week will see the US Presidential election come to a climax and no doubt there will be volatility in stock markets both before and after that date as traders take positions on the most likely outcome, then the consequences. I have no predictions as to the winners, but will happily admit I hope it is not Trump. If you think the US market will fly on a Biden win, buying a low cost S&P 500 tracker fund or better still an ETF would be the way to place your bet.
I have devoted recent research time to my quest to identify funds in the out of fashion value segment of the out of fashion UK stock market. This is all part of my current focus on contrarian investing which I hope will be educational.
Here is a chart:
This shows performance data for 3 funds and a benchmark. One of the funds (Man GLG) popped up from the research process that I explain in the recently published article offering an example of research into out of favour funds Pick a fund for the future or how to be a contrarian (m) The other 2 I have invested in myself in the recent past.
The Premier Miton fund I identified many years ago when I spotted an unusual combination of managers, but they promptly upped sticks and left after I started following it! Fortunately, the hastily brought in replacement manager also knows his way around the darker corners of the UK market.
The TM Crux offering (note that Crux are the management group, not Thesis, who are just supplying corporate director services) comes from a group founded by managers who made their name elsewhere and wanted a higher degree of personal involvement – a common pattern that often does not work so well. In the case of Crux, I think they have not been overly ambitious and the founders are probably wealthy enough to cope with a gentle build up of funds. The Special Situations fund manager Richard Penney ran a very focused fund at Legal & General and is one of te most contrarian investors I have come across. He only moved across to Crux recently.
Which of these funds would you buy? I imagine you might want me to answer that question rather than ask it!
I personally would look at the top 10 holdings of the funds to assist in making that decision.
It looks to me like the Crux fund manager has taken the view that he can make good money on relatively large defensive stocks being in fashion in the light of a pending recession. The Man GLG fund seems to have taken bets that expectations of a recession are overdone and is holding stocks that would do very well if the recovery is quick and dramatic. The Premier Miton fund seems to me to be what is always was – a fund where the stock picking is careful, agnostic of style and sector and in spite of the fund name, not an out and out value fund.
This is a very broad assessment, but when we are predicting the future (or at least betting on it) I think we would be wasting our time being too pedantic – more detail will not necessarily improve results!
My assessment (never a recommendation for any reader in particular) is:
- the Crux fund is being run by a manager who needs decent results now, because he is in a new job and so it is only mildly contrarian at this time
- the Premier Miton fund is what it always was, a great way of getting exposure to UK shares away from the mega caps focus of the FTSE100
- the Man GLG fund is one for those who want to bet against the mainstream and so most useful as a medium term satellite ‘returns booster’ but one that could go badly wrong. It is the true contrarian in this list.
I can tell you that I have bought the Man GLG fund already, but only to acquire a very modest weighting in my portfolio. If you believe in contrarian investing, you have to at times take on the associated risk!
The other 2 funds might well feature in my portfolio again, having done so in the past.
I will still do more research in this segment. If readers have their own ideas, I would love to discuss them!
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