Diversify your portfolio with Rathbone Global Opportunities

One way to help achieve this is to hold a global fund such as Rathbone Global Opportunities (GB00B7FQLN12), which aims for long-term growth by investing in under-the-radar and out-of-favour companies. Only about 4 per cent of the fund's assets are listed in the UK, making it is a good diversifier for UK investors.

The fund has been run by an experienced manager, James Thomson, for the past 15 years. He has a strong long-term record – over 10 years he has made a cumulative total return of 181.8 per cent compared with 118.9 per cent for a composite of his peer group, according to FE Trustnet.

Rathbone Global Opportunities has outperformed its benchmark, FTSE World Index, and the Investment Association (IA) Global sector average over one, three, five and 10 years. It is in the top quartile of its sector in terms of performance over one, three and five years.

Rathbone Global Opportunities can invest in businesses across sectors, geographies and the market capitalisation scale. However, the manager describes the fund's "sweet spot" as mid-sized growth companies in developed markets. Around 60 per cent of its assets are in US companies and it generally avoids direct holdings in emerging markets, so its asset allocation could be a good bet in the current environment.

"Even with a gradual tightening of monetary policy, the dollar is likely to continue to appreciate, and if the [Federal Reserve] does change its tune and adopts a more hawkish stance then this would feed dollar strength," says Tom Stevenson, investment director for personal investing at Fidelity International. "This would be bad news for emerging markets, especially those whose debts are denominated in US dollars, as a stronger dollar and rising interest rates make it more expensive for these companies and governments to service their debts. So it may be a good time to back or increase exposure to defensive US companies."

Mr Thomson has recently increased the fund's exposure to defensive US companies that are less economically sensitive, by adding to positions in sectors such as healthcare. Examples include the fund's largest holding, Align Technology (ALGN:NSQ), which manufactures 3D digital scanners, and cosmetic braces used in dentistry and orthodontics.

The fund's largest sector exposure is technology, but it has less exposure to Facebook (FB:NSQ), Apple (AAPL:NSQ), Amazon (AMZN:NSQ), Netflix (NFLX:NSQ) and Alphabet (GOOGL:NSQ) – the so called FAANGs – than some other global funds. Mr Thomson recently sold Facebook, partly because of concerns that its use of data will reduce user engagement.

"It was also because of his valuation discipline," adds Mr Stevenson. "Mr Thomson is not afraid to pay up for growth, but he's also very conscious of the importance of value. He makes sure he doesn't overpay."

Rathbone Global Opportunities' high-conviction growth style and substantial exposure to the US market mean that if growth-style investing falters or the US economy slows, its performance could be negatively affected. 

"But even as markets have become more volatile, investors have gravitated towards the US as a safe haven, so the US is actually quite a defensive market," says Mr Stevenson.

And Mr Thomson’s strong stockpicking track record suggests that generally he makes the right calls – whatever style of investment is doing well.

So, if you want to increase your portfolio's diversification, get long-term growth and have selective exposure to the US, Rathbone Global Opportunities' asset allocation, experienced manager and consistent performance make it a good option. Buy. EA

Rathbone Global Opportunities (GB00B7FQLN12)

Source: Morningstar as at 17/07/18, *Rathbone Unit Trust Management as at 31/05/18

Performance

Source: FE Analytics as at 16/07/18

Top 10 holdings as at 31/05/18 (%)

Source: Rathbone Unit Trust Management

Sector breakdown as at 31/05/18 (%)

Source: Rathbone Unit Trust Management