Whats your top fund pick for 2014?

Thrugelmir

A time to pick individual stocks. There's much chasing of yield over fundamentals. The main reporting season is bound to throw up some disappointing results. I'll be holding more cash until the picture becomes clearer.

bowlhead99

woody_56 wrote: »

Hi I am going with any New Frontiers funds.
Black rock comes to mind.

The Blackrock Frontiers IT is down to 'only' about 4% premium now which is a 'fairer' price for the NAV than it was earlier this year. Its returns have been great and the frontier markets indices have performed better than the wider emerging markets sector.

But like the other closed ended one (Advance Frontiers) its price has gone up more than its NAV - because decent performance combined with the soft-closing of the other well known and open-ended Templeton Frontier Markets at somewhere around a couple of billion dollars has pushed people towards these closed ended options, so it's costly to buy into them. In other words, this premium pricing could cost you a few percent in a long term hold (which I suppose is fine given the high volatility we'd expect over the coming years).

I think a closed ended vehicle at £/$ 100m-200m is structurally a better option for niche markets than having ten times that to deploy into opportunities (as Templeton has), with the challenges of liquidity to meet subscriptions and redemptions. Though I do have a couple of thousand in the Templeton one as they've shown over time that they generally know what they're doing in EM and with the soft closing I'd prefer not to be left on the sidelines. By keeping my hand in, I have an option to pile in later if I prefer.

In hindsight I would have been better with Blackrock over the last year or so and am considering increasing my exposure to closed ended vehicles vs open. I think other closed ended vehicles will emerge in the next few, because people are always looking for the next big thing and frontier markets literally contain 2 billion people with developing needs, wants, and spending power.

If you are looking around at Frontiers options, you have to wonder whether the outperformance of Blackrock can be maintained for the next year going forward - the Frontiers do seem correlated to an extent with the developed markets such as USA (which has had a good run and may mellow out or plateau for a bit as the underlying recovery is offset by tapering) rather than with the wider emerging markets indexes which seem to track closer to say China or Asia ex Japan, which have had a worse time of it.

Something to be aware of if comparing say Blackrock Frontiers to Advance Frontiers, is the quite different portfolio construction and fees.

Both use performance fees which is par for the course in listed and private funds in niche areas. However, Blackrock holds individual companies and charges you a 10% performance fee (with high watermark of course) for outperforming the MSCI frontiers index. Whereas Advance Frontiers does not chase individual companies and is a fund-of-funds using specialist regional managers. It is exposed to the underlying managers' fees (inc, performance fees), but it doesn't charge its own performance fee for simply beating MSCI. It only charges you if it beats a hurdle rate of 12% (or the watermark).

So if the MSCI basket did 20% and the fund did 19% you would find Advance charging you and Blackrock not. While if the MSCI does 5% and the fund does 10%, Blackrock would charge you and Advance would not (other than any fees that might have been passed through on the underlying funds).

So, it's quite an interesting sector with more than one route to get exposure, but clearly more volatile and inherently risky than developed equities.

pip895

Small & Mid caps have been the theme for 2013 - will it continue into 2014? As others have mentioned the valuations seem to be getting a bit stretched. My favourite fund in the sector is Unicorn UK Smaller Companies - slightly less volatile than Cazenove and it has also beaten it over 1 year. I also like CF Miton UK Smaller Companies but that has a short history so its a bit of a gamble.

The themes for 2014? who knows - I am keeping exposure to Europe, Japan (not Legg Mason - too scary) and China.

gadgetmind

pip895 wrote: »

Small & Mid caps have been the theme for 2013 - will it continue into 2014? As others have mentioned the valuations seem to be getting a bit stretched.

I intend to keep a bit of a small/mid cap bias, but am getting very over-weight. That's the good thing about rebalancing - no tricky decisions.

pip895

gadgetmind wrote: »

I intend to keep a bit of a small/mid cap bias, but am getting very over-weight. That's the good thing about rebalancing - no tricky decisions.

Yes it is a solution - but it is also selling something that is currently going up and buying something that is currently going down - which goes against the grain for me.

gadgetmind

pip895 wrote: »

Yes it is a solution - but it is also selling something that is currently going up and buying something that is currently going down - which goes against the grain for me.

Let's see how your grain feels about this in (say) 10 to 15 years.

Running in the other direction to the thundering herd has always worked well for me.

planteria

i have Cazenove Small Co and Old Mutual Small Co in my ISA
and Marlborough Spec Sit in my SIPP

happy to hold them, but don't plan to add further

i would say Latin America is a decent bet for 2014. i have the Threadneedle fund in my SIPP.

Totton

Biotech Growth Trust could continue to do well although with my less risky head on my current favourites are Cazenove UK Smaller Co's, Odey Absolute Return and Miton UK Multi Cap. These three have done very well for me in 2013 and are currently in my planning for 2014.

pip895

Totton wrote: »

Biotech Growth Trust could continue to do well although with my less risky head on my current favourites are Cazenove UK Smaller Co's, Odey Absolute Return and These three have done very well for me in 2013 and are currently in my planning for 2014.

I like Miton UK Multi Cap too - have you considered Miton UK Smaller Companies from the same stable?

grizzly1911

Totton wrote: »

Biotech Growth Trust could continue to do well although with my less risky head on my current favourites are Cazenove UK Smaller Co's, Odey Absolute Return and Miton UK Multi Cap. These three have done very well for me in 2013 and are currently in my planning for 2014.

Hasn't Mitom Multi Cap closed to new money?