Top 100 Funds: Specialist equities (6 Funds)

FUND DROPPED: Smith & Williamson Global Gold & Resources (GB00B3RJHY30)

We have dropped Smith & Williamson Global Gold & Resources because it has made negative returns in four out of the past five years, and over one and five cumulative years. This is due to the area it invests in – its benchmark S&P/TSX Global Gold has also made negative returns over those periods. But as the fund has not been making much money it might be better to get exposure to gold via a physical exchange traded commodity (ETC) or a mining shares fund with a wider remit.

Worldwide Healthcare Trust (WWH)

Worldwide Healthcare Trust invests across both the healthcare and higher-return, higher-risk biotechnology sector. So while it still offers some exposure to high-growth areas, it is relatively less risky than biotech-focused funds. 

“The trust has an excellent long-term track record through stockpicking based on fundamental research, and has typically been less volatile than most of the listed peer group,” says Ewan Lovett-Turner at Numis Securities. 

In December 2017 a senior member of its management team, Sam Isaly, stepped down after former employees made harassment allegations against him. However, the rest of Worldwide Healthcare’s management team remains in place, now led by Sven Borho, managing partner and co-founder of OrbiMed, and Trevor Polischuk. They had managed the trust with Mr Isaly since 1995 and 2003, respectively. So analysts don’t think Mr Isaly’s departure is likely to have a huge effect on the trust’s performance.

“The [company which manages] the trust, OrbiMed Capital, is a leader in the field of healthcare and biotechnology investment,” says Rob Morgan at Charles Stanley. “The depth of resource upon which it can draw in terms of medical and investment expertise, longevity of investing in the sector and network of industry contacts is extremely impressive.”

Biotech Growth Trust (BIOG)

Biotech Growth Trust has a strong long-term performance record, but over the past three calendar years, and first seven months of this year, it has underperformed Nasdaq Biotechnology Index. Part of the reason for this has been its overweight position in large-caps.

Analysts at Winterflood Securities say: “The trust’s record against the benchmark has been weaker for a more prolonged period than we might have expected over the past few years, albeit with periods of outperformance. But we continue to believe that the strength and depth of the OrbiMed team, which has recently added two PhD qualified analysts, will continue to lead to outperformance over the longer term.”

The trust is invested in a volatile area that you should only invest in if you have a very long-term investment horizon. At the end of August the trust was on a discount to NAV of around 7 per cent, but if there is an improvement in performance this could come in, also helped by its board’s policy of using share buybacks to try to keep the discount no wider than 6 per cent.

Polar Capital Technology Trust (PCT)

Polar Capital Technology Trust has a good record of outperforming Dow Jones World Technology index. It has over 100 holdings, which include large US technology companies such as Microsoft (US:MSFT) and Apple (US:AAPL), as well as smaller less well-known ones. 

The trust’s investment team, led by Ben Rogoff, selects companies according to their potential for shareholder returns and management quality. It also focuses on new growth markets, globalisation of major technology trends, and exploitation of international valuation anomalies and sector volatility.

The team invests in shares that fall into eight themes: e-commerce and digital payments, digital marketing and advertising, cyber and physical security, cloud computing and artificial intelligence infrastructure, software as a service, digital content and gaming, robotics and automation, and rising semiconductor complexity.

Companies listed in North America account for about 70 per cent of its assets and Asian companies account for around 18 per cent.

A downside to the trust is its performance fee, which at the end of its last financial year took its ongoing charge of 0.99 per cent up to 1.76 per cent. But specialist funds tend to cost more, and due to Polar Capital Technology’s performance fee having a high watermark and cap, this is the first time it has been paid since 2011.

Allianz Technology Trust (ATT)

Allianz Technology Trust has a good record of beating Dow Jones World Technology index and the returns of other technology funds. The trust’s investment team aims to invest in companies that use technology in an innovative way to gain a competitive advantage, for example ones that address major growth trends with products and services that replace existing technology.

The trust’s investment team is led by Walter Price, co-head of the AllianzGI Global Technology team, who has 40 years’ experience of investing in technology. They are based in San Francisco and say their proximity to Silicon Valley is beneficial, as many major technology companies are based there. The trust has a bias to North America, where over 80 per cent of its assets are invested.

The trust has a performance fee, but at the end of its last financial year this only took its ongoing charge up from 0.99 per cent to 1.15 per cent. And on 1 December 2017 it introduced a tiered structure to its base management fee. This was previously 0.8 per cent, but now reduces to 0.6 per cent on its market capitalisation over £400m. Its market capitalisation was around £530m at the end of August.

Jupiter Financial Opportunities (GB00B5LG4657)

Jupiter Financial Opportunities underperformed its benchmark in 2014 and in 2016, so its cumulative numbers were not looking good. But last year it bounced back and over the first eight months of this year the fund is ahead of its benchmark, MSCI ACWI/Financials.

The fund is run by Guy de Blonay, who has a strong historic record of making good returns with financials funds. He looks to invest in companies with favourable growth prospects due to factors such as proven managements, or strong products and services. He also looks for companies that can benefit from promising trends or themes within their sectors, where the current share price doesn’t seem to reflect their full potential.

At the end of July, banks accounted for around a quarter of the fund’s assets and it invests in various other types of financial companies including stock exchanges. Over 60 per cent of its assets are listed in North America.

BlackRock World Mining Trust (BRWM)

BlackRock World Mining Trust’s returns have been fairly volatile, although it can make very strong returns. Its policy of distributing a substantial amount of the income it has available also means it has a yield of over 4 per cent.

The trust invests in the shares of mining companies involved with a range of metals including copper and gold. It can also put up to 20 per cent of its assets into unquoted investments, although the Avanco Resources royalty contract it currently holds only accounted for 2.3 per cent of its assets at the end of July. Although the trust had some difficulties with other unlisted investments in 2014, this royalty contract is performing well.

“BlackRock World Mining Trust is a core holding for investors seeking diversified exposure to global commodity companies who also wish to receive an income,” says Rob Morgan at Charles Stanley. “It [is run by] one of the most established and well-resourced teams in the sector and invests in royalty agreements with mining companies to enhance its yield.”

The trust is run by Evy Hambro, who has overtwo decades of investment experience, alongside Olivia Markham.