How do you fancy putting your money into something a little different? Well, the good news is there are plenty of options for more curious investors.
Such portfolios often concentrate on niche sectors that provide more focused exposure to particular areas than is possible in a more generalist fund.
Here, we look at four funds whose attention is on very different parts of the global investment universe and discuss why they could be worth considering.
The first fund on our list is a specialist in the global insurance sector that’s run by lead manager Nick Martin, as well as Dominic Evans.
When you consider how many insurance policies are taken out each year around the world, it’s easy to see the potential of being involved in such a sector, especially as many forms of insurance are a legal requirement for both individuals and businesses.
This fund was launched almost 24 years ago and typically owns 30 to 35 holdings. It looks to invest in quality insurers that can produce sustainable underwriting profits. Generally, these are specialist non-life insurance firms, and those in the casualty and risk sectors.
According to the most recent fund factsheet, the fund has a diversified spread of market capitalisation exposure, with 40.7% in mid cap names, 38.7% in large caps, and 20.6% in small caps*.
It’s also geographically diversified. While the US accounts for the lion’s share of assets under management with 74.2%, the UK has 10.9%, and Canada 9.1%*. Other areas, including Europe and Asia, account for up to 1.2% and 2.3% respectively*.
One of the fund’s largest holdings is Arch Capital, a leading name in the provision of specialty insurance, reinsurance, and mortgage insurance solutions. Other prominent names in the portfolio are Chubb, Marsh McLennan, and Fairfax Financial Holdings*.
When you think about companies whose products you use regularly, chances are they will include many dominant global businesses. These names, including the likes of tech firm Microsoft and credit card giant Visa, are at the heart of the Morgan Stanley Global Brands fund*.
Its central thesis is that high quality companies built on dominant market positions and underpinned by powerful intangible assets can generate attractive returns over the long term.
The fund focuses on companies with defendable and visible future earnings. These qualities are seen as crucial because they enable management teams to not only provide attractive returns to shareholders, but also reinvest to help stay ahead of rivals.
As well as the stocks already mentioned, the fund’s 10 largest holdings include consumer goods company Reckitt Benckiser and tobacco giant Philip Morris International*.
According to its latest commentary, the fund’s performance in the second quarter of this year was down to a combination of stock selection and sector allocation**. The portfolio’s overweight to the consumer staples and health care sectors were the main positives for sector allocation, although being underweight consumer discretionary also helped.
“This was more than enough to counteract the drag from the lack of exposure to energy and utilities, given their outperformance in the quarter, and the hit from the information technology overweight,” it added.
There’s no denying that technology influences almost everything in our lives these days. Just think of the number of gadgets you have within easy reach! From smartphones and televisions to developments in healthcare, it’s a crucially important sector that’s only likely to grow in importance over the coming years.
Apple, Alphabet and Visa are among the largest stock positions in this fund’s portfolio, along with wireless technology firm Qualcomm*.
The fund’s run by the experienced Jeremy Gleeson, who has been at the portfolio’s helm for the past 15 years and has a quarter of a century’s experience in the technology sector.
In a recent update, he pointed out that first quarter earnings had produced healthy results for the technology sector**. As a result, he’s optimistic for the future. “These strong results in a challenging environment, combined with share price declines, means valuations across the technology sector have become increasingly attractive especially for the profile of companies that we find interesting in terms of good-quality management teams and long-term growth potential,” he wrote.
Artificial intelligence (AI) is one of the most interesting aspects of the ongoing technological revolution and deserves its own special mention.
While not classifying itself as a technology fund, the stocks chosen for Sanlam Artificial Intelligence fund will be those whose engagement with AI is likely to make a material difference to their future.
The fund’s manager, Chris Ford, uses an AI system himself to help analyse thousands of financial statements for keywords and phrases that indicate companies are incorporating AI into the future growth plans.
The screens used will leave an investable universe of around 500 stocks. While they can hail from any sector, a core element of their future growth must be based on the benefits of AI.
According to the fund’s recent commentary, the current high inflation rates are expected to follow what they’ve historically done for centuries and gradually return to normal**. “This gives us some confidence that inflation can be brought under control, and it goes without saying that a lower inflation environment is supportive of the high quality, long duration growth assets that we favour,” it added.*Source: fund factsheet, 30 June 2022