SharingAlpha: Selectors outline their Top 5 funds

Comgest, Wellington and HSBC are among the providers of some 15 funds that have been identified and top-ranked by fund selectors Francisco Amorim, James Levy-Newman and Alberto Moioli, according to latest data provided by the SharingAlpha platform.

Francisco Amorim (pictured left), fund selector at Millennium BCP – Wealth Management Unit, based in Lisbon, has outlined his Top 5 as:

FundCommentSelector Rating out of 5
Comgest Growth Emerging MarketsA global emerging markets equity fund that invests in a portfolio of high-quality, long-term growth companies. They are contrarian investors and seek stocks offering quality growth at a good price, when they are out of favour. The strategy has a team with more than 10 years of experience and a very detail and sophisticated investment process.4
Wellington US Research EquityThe fund utilises an approach designed to add value through fundamental security analysis. The focus is on stock selection within industries. The portfolio will combine a blend of investment disciplines, which tends to diversify investment style risk. This fund is one of the few that beats its benchmark in longer time periods (3, 5, 7 and 10 years)4
NN (L) Invest Alternative BetaThe fund aims to replicate hedge fund returns using advanced modelling techniques and investments in liquid traditional betas. Generally on a monthly basis a quantitative model determines the allocation to a set of different market factors that aim to outperform the HFRX Global Hedge Fund Index and to replicate the broad-based HFRI Fund Weighted Composite Index. The model enables the fund to capture the dynamics of the hedge fund industry to a large extent5
Morgan Stanley Euro Corporate BondThe fund primarily invests in IG corporate bonds having flexibility to invest in off-benchmark asset classes such as high yield, US credits and hybrids (up to 30%). With a long-term value approach, the process incorporates both quantitative screens and top down value assessment (macro outlook on rates, currencies, countries). The portfolio has been showing an underweight bias in duration and an overweight to Financials (Banking and Insurance)4
T.Rowe Price US AggregateThe fund has considerable latitude to invest within and outside the Aggregate universe. However, as a rule, and given the low risk approach, the team does not tend to stray outside the benchmark. A combination of independent alpha sources guided by a strategy team, which develops a top-down investment thesis creating the basis for excess returns. Typically the fund will have a structural underweight to Treasuries and a corresponding overweight to corporate debt.4

 

James Levy-Newman (pictured left), a director of Clearwater Private Investment, notes that the phrase “Wealth Management through Secured Lending” captures the investment philosophy of Clearwater Private Investment and is the common thread through the firm’s top five SharingAlpha fund selections.

“Our advisory clients hold neither shares nor bonds in their investment portfolios. Rather, our approach is one of pure alpha, seeking consistent, attractive returns for our clients in a strict context of non-correlation with the stock and bonds markets. How do we achieve this? Through investment in a carefully chosen selection of the leading secured lending funds worldwide.

“Our alpha flows from the skill of our selected managers in fulfilling their singular objective: to lend our client’s money in such a way as to ensure that it is returned with a satisfactory interest earned. Alternatively, in the unlikely case of a loan default, the manager must have a claim to a real asset of sufficient value to more than offset the loss of capital due to nonpayment of the loan.

“While this objective may sound simple, the reality is much more difficult. Our due diligence has led us to interview managers on three continents, seeking the combination of credit control, on-the-ground market experience, and legal environment that will ensure that our investors earn not only a return on their capital, but most importantly, achieve the return of their capital.

“We choose managers from a wide range of areas within the broader context of secured lending, so as to ensure diversification both geographically and in terms of economic sectors. The following are my five top rated funds on SharingAlpha with our current rating on each:”

FundsCommentSelector Rating out of 5
Synthesis Market-Place Lending (P2P) FundFounded by General Partner Spyros Papadopoulos in 2012, this is the pioneer lending fund in Europe, and continues to break new ground under Spyros´ leadership. While originally focused on investing in whole loans of P2P consumer lending platforms such as Lending Club and Prosper, the fund now is almost entirely invested in secured international trade finance transactions. The fund has not experienced a negative month in more than four years, and is consistently meeting its target return of 5-7% over LIBOR net for investors after all fees.5
Commercial Opportunities FundThis fund focuses on invoice, asset and commercial finance opportunities primarily in the UK. The Fund invests in a diversified portfolio consisting of short term commercial and industrial loans. The experienced team managing the fund selects borrowers with the objective of generating a steady stream of interest income with a low default risk both in individual cases and the wider asset class. Almost all transactions are secured on assets (often outstanding invoices and other assets of the underlying customers) frequently with personal guarantees or pledged securities from the borrowing customer. The fund has not returned a negative month to investors since 2012, and is consistently achieving its target return of approximately 6% net per year.4.3
 Prestige Alternative Finance FundPrestige Alternative Finance invests in a diversified portfolio consisting of rural, commercial and industrial loans, leases and finance agreements in the United Kingdom. The majority of lending is secured on assets (typically specialist machinery, equipment, vehicles and, increasingly, renewable energy and waste to energy) together with personal guarantees and substantial initial deposits from the borrowing customer. Since its inception in 2009 the fund has never returned a negative month, and consistently achieves its target return for investors, net of all fees, of 6% per year.4.2
Prime Meridian Real Estate Lending FundThis fund is a pioneer in the United States market (though similar funds exist in the European market).  The fund participates in real estate backed bridge loans through marketplace lending platforms, selecting a broadly diversified portfolio of secured loans where the loan does not exceed 70% of the independently appraised value of the property.  The Fund has been in operation for over a year, and is reaching its target return of 8% per year net return for investors.4.2
Luxembourg Life Long Term Growth FundThis fund purchases, and holds to maturity, a carefully selected, diverse portfolio of U.S. whole life insurance policies (beyond the contestability period) that are sold by policy holders seeking liquidity. The managers of this fund are recognized world leaders in this very lucrative niche of secured lending. The managers continuously employ cutting-edge actuarial and financial analysis to mark to market the existing portfolio of policies. The fund has not given a negative monthly return since 2010, and typically returns 1% to 2% per month net to investors, depending on the particular share class.4

“While this selection of funds is possibly like no other within the SharingAlpha community, we at Clearwater Private Investment are convinced that given the extremely low (or even negative) returns available from investing in traditional fixed income, wealth advisors must turn to secured lending as an alternative. Our exclusive focus on identifying fund managers capable of evaluating credit worthiness in their chosen niche of secured lending allows for a consistently successful quest for alpha, and we are pleased to share our experience with the SharingAlpha community.

Alberto Moioli (pictured left), senior advisor, Portfolio Modeling at FinecoBank, comments: “I built my virtual portfolio using a global allocation approach, investing in equity, fixed income, and alternative funds and trying to achieve a reasonable level of diversification while using a relatively active stance. Once identified the key areas to be invested in, I screened the funds’ universe to select the best managers in the SharingAlpha platform. Here below are listed my five best selections:”

FundsCommentSelector Rating out of 5
BSF European Opportunities Extension FundDue to the uncertainties coming from the political side in Europe, I selected a fund offering the possibility to take advantage of an alpha-generation engine on both sides, long and short. The really pronounced country and sector allocation coupled with a great use of leverage made this fund one of my key choices for my portfolio.4.4 – Weight in the portfolio: 22%, tactically increased in March from the original 15%
MS INVF Global Brands FundThe goal was that of getting an exposure to a concentrated basket of carefully-selected solid businesses while waiting for more clarity about the Fed stance on interest rates for 2017. The solid bias towards the Consumer Staples and IT sector coupled with the US dollar exposure of the fund played a role to diversify the overall equity portion of my allocation4.3 – Weight in the portfolio: 15%, tactically increased in March from the original 10%
HSBC GIF Turkey Equity FundOn the emerging markets equity side, I focused on Turkey. This market has experienced a progressive decline since the beginning of 2015 due to a deterioration of the political environment and of the business conditions. At the beginning of 2017, prices were at a 5-year minimum and the sentiment was deeply negative. When the rally of the global emerging markets equity began in mid-January, I decided to take a satellite bet on my portfolio by adding the “HSBC GIF Turkey Equity Fund” (LU0213961682) appreciating its exposure to cyclical sectors, like Financials and Industrials, as well as its pretty active attitude4.7 – Weight in the portfolio: 5%
FF – Asian High Yield FundWithin the Fixed Income section of my virtual portfolio, the focus was on high yielding securities. I chose to have an exposure to Asia through the “FF – Asian High Yield Fund” (LU0922333165) expecting the region to suffer less than others from the interest rates hikes by the Federal Reserve on one side, and to benefit from the stabilization of the situation in China, on the other side. My choice was that of selecting a EUR-hedged share class of the fund, preferring to take the foreign currency risk within the Equity portion of my portfolio only.4.3 – Weight in the portfolio: 10%
Henderson Gartmore UK Absolute Return FundTo add some decorrelation to my overall allocation, I picked the “Henderson Gartmore UK Absolute Return Fund” (LU0490769915). I liked the idea of being invested into the UK area on both sides of the market, dynamically managing the market Beta, and lowering the risk of my portfolio with an instrument offering a low correlation with global markets.4.4 – Weight in the portfolio: 5%, tactically reduced in March from the original 10%

 

Further information on SharingAlpha is available from www.sharingalpha.com.

Latest monthly updated lists of top rated funds and providers, as identified by users of the SharingAlpha platform, as well as details of a CAIA competition opportunity, are available via the Community section of the InvestmentEurope website.

ABOUT THE AUTHOR
Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 16 years he has been based in London writing about funds and investments . From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope.

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