Top 50 Funds 2022: Growth equity

GROWTH EQUITY

GLOBAL GROWTH (5 FUNDS)

A global equity fund can often form the core of a portfolio, but a tendency of many such funds to have heavy allocations to the US and tech stocks has made for a painful first half of 2022. Our list continues to hold some well-known but fairly differentiated names, from a high-octane play on structural growth stories to some names which are notably light on the likes of US tech. But we stick with last year's stance of excluding Fundsmith Equity (GB00B41YBW71), on the basis of its size and the fact there is a good range of alternative strategies available to investors.

Scottish Mortgage Investment Trust (SMT)

A concentrated portfolio with a big focus on innovative names in tech and healthcare, Scottish Mortgage has suffered especially acutely in the growth sell-off of recent times. Big drops for major listed positions such as Moderna (US:MRNA) and ASML (NL:ASML) and a swathe of writedowns in the trust’s portfolio of unlisted companies have knocked its net asset value (NAV) performance severely off track, with investors enduring a share price loss of nearly 40 per cent for the year to late August.

We continue to like this trust for its focus on disruptive companies of the future and for a long-termist, disciplined investment approach that has fuelled outperformance in recent years. We would also point to the fact that the trust’s shares continue to trade on a relatively rare discount to NAV, offering a potential contrarian buying opportunity. But the woes of the last year help to re-emphasise the fact that its concentrated, high-octane approach can make it especially volatile. As we recently discussed, the risky nature of the fund and a notable skew to a few sectors means it might be better viewed as a satellite holding than as the core of your portfolio. Investors should also be careful not to load up on too many funds with a similar, growth-oriented approach.

As panellist David Liddell sums up: “It has been exceedingly volatile of late and is likely to remain so. This may not suit all investors.”

Rathbone Global Opportunities (GB00B7FQLN12)

Another champion of the growth style of investing, Rathbone Global Opportunities has had its own travails in the last year but continues to stand out for both its process and long-term performance. The fund's managers scour developed markets for innovative, scalable companies that not only have the potential to shake up their industries but have defensive characteristics including a resilience against change and an offering that is difficult to imitate. The team generally avoids taking leaps of faith by backing companies with an “unblemished past” and avoiding unpredictable sectors with poor growth prospects.

The fund has many of the traits common to other successful global equity portfolios of recent years, including a chunky allocation to US equities. But it has shown greater flexibility than some of its peers, with a fairly small allocation to technology – just 16.8 per cent of assets at the end of July. The fund’s biggest sector allocations at that time were to consumer discretionary stocks, industrials and financials. Major holdings included Costco (US:COST) and Sartorius Stedim Biotech (FR:DIM), although position sizes are relatively small.

The team’s official 'sweet spot' is in mid-sized growth companies, according to the fund's literature, but the strategy has certainly had a substantial preference for large caps in recent times, with this market segment making up more than 90 per cent of the portfolio at the end of July. Fund manager James Thomson told the IC earlier this year that this could be attributed partly to the team’s tendency to run its winners (ie, including companies that were once smaller) and in part to the attractions of large-cap stocks such as the US tech giants.

Lindsell Train Global Equity (IE00B644PG05)

Another well-known and fairly differentiated global equity fund, this strategy had a 2021 to forget due to a lack of tech exposure or cyclical names, but it has fared better than many of its most prominent rivals this year so far. While still slightly worse off than the MSCI World index, Lindsell Train Global Equity has registered pretty modest paper losses at this stage.

What’s more important is how it differs from other global funds and how it might hold up in a persistently inflationary environment. As mentioned, the fund has very little in tech, sparing it from some of the painful market rotations of recent months, and its heavy focus on established companies with strong brands in areas such as consumer staples should in theory translate into a good level of pricing power.

The fund has significant exposure to the UK and Japan and an underweight position in the US, putting it at odds with many of its peers. It also has some big position sizes, leaving it exposed to stock-specific risks. Take, for example, last year's question marks over London Stock Exchange (LSEG) (8.6 per cent of the fund at the end of June) and its acquisition of Refinitiv. As with all Lindsell Train funds, low turnover does reduce trading costs, but it also means investors will have to be prepared to wait if certain holdings underperform.

Jupiter Global Value Equity (GB00BF5DS374)

The only value fund in its category, this strategy run by Ben Whitmore has held up well in a time when the other names in our global growth group have struggled. The fund is underweight the US equity market relative to the MSCI World index, perhaps unsurprisingly given its style preferences, with decent allocations to Europe and the UK compared with many of its peers. Its bigger sector allocations are to the consumer discretionary space, consumer staples and financials.

It’s important that a fund with a contrarian style sticks to its guns even when that approach is out of favour, and strong performance from this team amid better times for cyclical assets suggests they have done so. The managers seek to identify “lowly valued securities with resilient balance sheets and good businesses in an attempt to capture the value premium”.

They also avoid attempting to make forecasts about macro events or even individual companies, instead trying to gauge where its current earnings sit in a broader historical context. We continue to favour this strategy but would note that a broad range of global value funds are available, with different preferences when it comes to sectors, markets and just how unloved a stock should be before they are prepared to buy it.

Stewart Investors Worldwide Sustainability (GB00B7W30613)

An interesting option for investors considering a core holding with an environmental, social and governance (ESG) focus, this fund is run by a firm well known for its robust due diligence and strong sustainability credentials. The investment managers look to buy shares of high-quality companies that are positioned to benefit from, and contribute to, sustainable development. The search for “high-quality” names means the team focus on the quality of company management, the quality of the company itself, including its social utility and environmental impacts, and the quality of a firm’s finances. When it comes to company management, Stewart Investors will often back companies with some form of committed or long-term owner, such as a family or founder.

Stewart Investors has a strong footprint in the emerging markets and Asia and unlike many peers this particular fund also invests in such parts of the world. The fund had a 10.5 per cent allocation to the emerging markets at the halfway point of 2022 and 9.1 per cent in the Pacific ex-Japan region. Around a third of its assets were in Europe and the Middle East (ex-UK), with nearly a quarter of the portfolio in North American shares. The fund had 49 holdings at the time, with the biggest position amounting to 5 per cent of assets.

Last year we noted that this fund’s defensive approach had tended to mean it fares well in falling markets, with the difficult conditions of 2018 serving as a good example. But like many other sustainability-minded funds it has fared terribly in the last 12 months, racking up a paper sterling loss of around 14 per cent. That is likely a result of its investment style as well as overweight allocations to the information technology and healthcare sectors.

UK GROWTH (4 FUNDS)

UK blue chips have been a rare source of relative relief for investors in a trying 12 months, with the cyclical-heavy FTSE 100 returning nearly 7 per cent in the year to late August. But it’s not all rosy: popular growth stocks that held up well in previous years have been in freefall, as have small- and mid-cap shares more generally. This has resulted in a painful moment for many of the more successful UK growth funds, some of which remain in our list. We have, at the same time, attempted to add a greater variety of investment style diversity to the category.

Liontrust Special Situations (GB00BG0J2688)

One of the big beasts of its fund sector, Liontrust Special Situations follows a quality growth investment style, with a focus on companies that have a durable competitive advantage which lets them “defy industry competition and sustain a higher-than-average level of profitability for longer than expected”. This has tended to work well for managers Anthony Cross and Julian Fosh over the longer term, as has a decent weighting to small- and mid-cap shares.

Two question marks do linger over the fund. One relates to the fact that, as investors might expect, the companies it favours have been hit hard in the last year or so, at least in share price terms. Backers might ask whether the fund is in for a more difficult time for an extended period, and whether they have enough style diversification in their portfolios if they continue to hold it.

If investors are happy to keep looking through shorter-term volatility, there are still valid questions about the fund’s size and whether that limits its scope for outperformance. Liontrust Special Situations has more than £5bn in assets – something that could make it less nimble and limit its ability to effectively delve further down the market cap spectrum. One of our panellists argued that it was simply “too big”.

For now, we stick with the fund. Others on the panel believe it remains a good core holding despite its size, and our own analysis has shown that some UK small-cap portfolios have continued to deliver the goods despite taking on substantial assets.

Slater Recovery (GB00B90KTC71)

Given that funds with 'special situations' in the name focus on value investing, Liontrust Special Situations, as discussed above, is confusingly named given its actual focus. The process behind Slater Recovery also comes with more nuance than the name might lead us to believe.

The core of the portfolio consists of companies with low price/earnings ratios in relation to their earnings growth, cash flows and overall financial positions – as you may expect from a recovery fund. But those low ratios aside, a strong focus on quality growth investing is also embedded in the process, with the team favouring companies with powerful competitive positions and high returns on capital, among other things.

The fund has a smattering of different sector exposures, ranging from a roughly 15 per cent allocation to commercial and professional services to 9.3 per cent in software and services and 7.9 per cent in diversified financials. Prominent holdings have recently included Serco (SRP) and specialist media group Future (FUTR).

Holdings like Future and Next Fifteen Communications (NFC) might look like names that commonly crop up in UK equity funds, but Slater Recovery’s track record does set it apart from the competition. The fund has admittedly had a dismal 2022 so far, but it has also managed double-digit returns in seven of the previous 10 full calendar years. Even if its investment style currently looks vulnerable, investors who can stomach the fund’s volatility have tended to do very well over longer periods.

New: Fidelity Special Situations (GB00B88V3X40)

We were keen to add some style diversification to the list and have settled on Alex Wright’s Fidelity Special Situations fund as a way of introducing that. The investment team has a contrarian bent, with a preference for unloved and undervalued stocks where the market appears to have overlooked the potential for recovery. The team likes sectors where change can happen quickly and big recent allocations include financials and industrials. It’s also worth understanding the team tends to hold a selection of companies from European markets in the portfolio, with French pharma stock Sanofi (FR:SAN) among the top 10 holdings at the end of July.

The fund has had a mixed 2022 up until now, faring much better than growth-minded peers but not racking up the big gains enjoyed by a small number of rival value managers. Having said that, we like the team’s impressive longer-term track record and unconstrained approach – including its use of derivatives and overseas positions.

But there are other value options available. Take Fidelity Special Values (FSV), the closed-ended fund run by the same team that often has bigger ups and downs in its performance, or the multitude of UK value funds we analysed in March.

It’s also worth noting that like many of their growth-oriented peers, the Fidelity funds do have a decent level of exposure to mid-cap shares.

BlackRock Smaller Companies Trust (BRSC)

A one-year share price loss of around 35 per cent has made this an extremely painful fund to hold lately, but its process and long-term performance continue to stand out. This is another growth-oriented name, with the investment team using company analysis to find nimble businesses with strong market positions and resilient cash flows, run by entrepreneurial management teams. The fund continues to receive praise from our expert panel, with Charles Stanley's Rob Morgan praising the fact that stock selection has consistently driven outperformance.

As ever in the investment trust space, volatility can offer opportunities for patient investors who are careful to stay focused on fundamentals as well as price.

The trust’s shares recently traded at a double-digit discount to portfolio NAV and patient investors might spot in that a cheap way into a market cap segment that has often outperformed bigger rivals over longer stretches of time. By this metric BlackRock Smaller Companies looks “cheaper” than the small- and mid-cap focused stablemate BlackRock Throgmorton (THRG), although the latter did have a good record of outpacing rivals operating in both the small- and mid-cap space prior to the recent sell-off. 

Dropped: Henderson Smaller Companies Investment Trust (HSL)

Genevra Banszky von Ambroz, a fund selector at Evelyn Partners and one of our panellists, pointed to both a small-cap bias and a lack of value options in this category. That prompted the introduction of Alex Wright’s Fidelity fund and the removal of this trust, which attracted the least solid support from our panel as a whole.

To the investment team’s credit, the fund has fared well in the longer term and holds plenty of names popular with both retail and professional investors in the UK, such as Watches of Switzerland (WOSG). But this name goes for the sake of providing a broader variety of options.

EUROPE (2 FUNDS)

As the energy crisis rears its head, European stocks are once again far from top of many investors' shopping list. But the region is still home to a wide range of dynamic and global companies, and has long had the capacity to perform well above expectations.

BlackRock European Dynamic (GB00B5W2QB11)

Another fund that has endured a horrible year, BlackRock European Dynamic still has the faith of various panellists for a couple of reasons. Some view it simply as having the potential to recover from its recent doldrums, while others have praised the sheer level of resources BlackRock has dedicated to European equity research, despite long-term manager Alister Hibbert stepping back at the end of 2020.

With a focus on companies that are either “undervalued or have good growth potential”, the fund’s remit does look fairly vague at an initial glance – likely reflecting the fact the team can be flexible to adapt to different circumstances.

But the team can also take high-conviction positions, something that can reward or punish investors depending on how the portfolio is working out. Its top 10 positions made up around half the portfolio at the end of July, and included relatively chunky exposures to Novo Nordisk (DK:NOVO.B), manufacturing specialist Lonza Group (CH:LONN), LVMH (FR:MC) and ASML (NL:ASML). A bad year aside, this remains a well-resourced fund run by a team that can put money where its mouth is.

New: Lightman European (GB00BGPFJN79)

Europe can be seen as a market with a strong 'value' component, a view that stems from the types of stocks in the European indices as well as the region’s relative unpopularity. While investors should certainly be wary of diving into certain cyclical stocks at a time when recession appears to be looming, we have decided to once again broaden out the category scope to include another investment style.

We have included Lightman European as a value option as a result. Run by Rob Burnett, who ran a European value fund at Neptune for more than a decade before going it alone, the fund targets undervalued companies with positive operational momentum. It has behaved as value enthusiasts might have hoped in the past year, banking a modest gain while others suffered double-digit losses. It had big allocations to financials, energy and materials at the end of July. Burnett has also been avoiding countries most exposed to Europe’s energy crisis – meaning he has less than half of the benchmark weight in German stocks.

Dropped: Marlborough European Special Situations (GB0001719730)

This fund, called Marlborough European Multi-Cap until a rebranding last year, has admittedly done very well for investors in previous times by fishing predominantly in the smaller companies space. It exits the list for the sake of investment style diversity rather than for any obvious failings in the portfolio itself.

NORTH AMERICA (2 FUNDS)

Often regarded as something of a graveyard for active managers, North America was nevertheless one of the categories where the panel had multiple suggestions of funds for inclusion. We have changed one of the funds where an alternative was more obviously favourited, and have detailed some of the other choices that caught the panel’s eye. This is a region where investors may well be tempted to use a passive for 'mainstream' exposure to the likes of big tech, and complement it with some differentiated active exposure.

Artemis US Select (GB00BMMV5105)

A distinctive fund that has often managed to outpace the notoriously hard to beat S&P 500, Artemis US Select continues to stand out even if it has recently lagged the market somewhat. Manager Cormac Weldon complements his initial investment ideas with data mining and financial analysis. He carries out a significant level of analysis on wider economic trends to inform his investment views – in contrast to the many managers who claim to largely ignore such developments and focus purely on company fundamentals.

Weldon’s process has certainly worked well in the past, although as noted above the fund has lagged the S&P 500 slightly in the last 18 months or so. A bigger issues might be that, like many mainstream US equity funds, Artemis US Select does have a bias towards large caps and some sizeable positions in some of the big US tech names – raising concerns about just how far it can deviate from the market in its current form. Investors wanting something different from the names available in a US equity tracker might alternatively consider what’s on offer below.

New: Brown Advisory US Smaller Companies (BASC)

One way to differentiate or diversify your US equity exposure is to go further down the market cap scale and reduce your reliance on the likes of the tech majors. This trust, a former Jupiter vehicle taken over by a Brown Advisory investment team last year, has a clear focus on small- and mid-cap names, with a particular interest in businesses that have durable growth, well-aligned management and shareholder interests and “scalable go-to-market strategies”, as well as attractive valuations. Given the dynamic nature of the US economy, a small-cap play could prove especially interesting in addition to more mainstream exposure.

It’s for this reason that we have stuck with a small-cap option rather than seeking to add a value fund into this particular category. This portfolio can admittedly have a quality growth focus, and some analysts have argued that it has a greater growth bias than the rival trust exiting our list. That has certainly translated into some poor performance so far this year, although the trust’s shares are now on a double-digit discount to NAV.

Dropped: JPMorgan US Smaller Companies Investment Trust (JUSC)

Dropped in favour of a rival trust whose new team has a compelling long-term track record, the JPMorgan trust has nevertheless received plaudits in the past for both performance and the experience of the team. It’s worth noting that panellists also made the case for some other US funds that go further down the market cap spectrum, including the likes of T Rowe Price US Smaller Companies Equity (GB00BD446P55) and Premier Miton US Opportunities (GB00B8278F56).

JAPAN (2 FUNDS)

A niche region whose returns have disappointed sterling investors partly due to the weakness of the yen in recent times, Japan still comes with its selling points – from technological innovation to a slow but ongoing story of corporate reform (and improving dividends). We had plenty of experienced fund management teams to choose from here, though the imminent retirement of one stockpicker has triggered a change in the list.

Baillie Gifford Japan Trust (BGFD)

The investment managers on this trust take the approach often associated with Baillie Gifford equity funds: backing companies, some of them innovative or disruptive, that appear to have strong structural growth stories. In this case, the team invests in a set of 40 to 70 different businesses, predominantly backing those that are medium or smaller-sized, with limited amounts of turnover.

Like many of the other Baillie Gifford-managed equity trusts, the portfolio rewarded investors hugely in 2020, only to experience much tougher times in the following 18 months. And yet this fund should continue to do its job for patient investors: panellist Priyesh Parmar, from Numis, notes that manager Matt Brett has at least “used market volatility” to exploit some attractive valuations, while also leaning into this by further increasing the level of gearing on the trust.

New: Man GLG Japan CoreAlpha (GB00B0119B50)

With a stalwart Japanese equity fund exiting our list for fairly straightforward reasons (see below), we have taken the opportunity to introduce an established value portfolio into the mix. The Man GLG Japan CoreAlpha team looks for stocks that seem undervalued based on their price-to-book ratio, and like other value offerings it has often been associated with a preference for banks. But the fund’s most recent sector overweight was in transportation equipment, which made up around a fifth of the portfolio at the end of July.

Market rotations can be a good opportunity to gauge a fund’s leanings, and this fund has made huge returns amid the shift away from growth shares, making a sterling total return of around 14 per cent in the first eight months of this year. Investors should remember that such strong stances can be painful at other times, as in 2020 when the fund made a similar level of sterling losses. But the fund does serve as one way to diversify your Japanese exposure if so desired.

Dropped: Martin Currie Japan Equity (GB00B8JYLC77)

The received wisdom about this fund is that it can easily be sitting on either enormous gains or enormous losses, over any given period. That’s not too hard to illustrate: if we look at recent performance, the strategy would have made a sterling investor a 40.5 per cent return in 2020 before losing them 16.4 per cent in 2021 and shedding another 22.5 per cent in the first eight months of this year.

While such movements can sometimes be accelerated by currency fluctuations, the fund, which seeks to back the beneficiaries of long-term structural changes in Japan, is, simply put, notorious for its sheer volatility. But it has also tended to generate huge gains in the longer run, rewarding patient investors extremely well.

Hideo Shiozumi, who has overseen this investment management approach since the 1990s, is finally stepping back from his portfolio management duties on the fund as he prepares to retire. Given that his style has been so distinctive, and that Martin Currie is now seeking to develop its own in-house Japanese equity team, we question whether the fund’s old victories will be replicated. So for the time being it is an easy decision to remove this name from the list. A continuation of such strong performance could always prompt its return in the future.

ASIA (2 FUNDS)

Asia’s attractive demographics have appealed to investors for a long time, but this is still a region with plenty of volatility and much country-specific risk. We continue to back two Asia funds that behave slightly differently to their peers, while also highlighting some single-country options for the more granular investor.

Stewart Investors Asia Pacific Leaders Sustainability (GB0033874768)

A fund that on the surface does much the same as the Stewart Investors portfolio in our global growth category, this strategy has a focus on social usefulness, the quality of company managements, the finances of a business and the sustainability theme in general. Investors may well like the fund’s relatively defensive approach, its focus on quality in different forms and those sustainable leanings. The fund certainly has a fairly strong track record of performance, too.

We continue to favour this as a useful and interesting Asia play, but should draw attention to another of its distinguishing characteristics. Much like the Stewart Investors-run Pacific Assets Trust (PAC), this fund has tended to invest very little in China, a country that still makes up a large chunk of Asian and emerging market indices. If Chinese stocks soar as they did in 2020, the fund is likely to miss out on big gains and lag Asian indices and many rival funds. On the other hand, it will also dodge painful China sell-offs, including the one that took place in 2021.

By contrast, Indian companies made up a whopping 46.3 per cent of the portfolio at the halfway point of this year, with its top position in vehicle manufacturer Mahindra & Mahindra (IN:500520) representing 7.4 per cent. While very much focused on individual, seemingly resilient companies, this fund does come with country-specific risk of its own.

Fidelity Asia Pacific Opportunities (GB00BQ1SWL90)

This fund has had a rough 2022 so far, losing around 9 per cent in the first eight months of the year. But it still comes with a notably differentiated approach and an otherwise strong record of performance. Manager Anthony Srom picks stocks on a bottom-up basis with a focus on their fundamentals, market sentiment and valuations, and tends to have a high-conviction approach. The fund had just 26 holdings at the end of July, with China’s Focus Media Information Technology (CN:002027) and Taiwan Semiconductor (TW:2330) each making up more than 8 per cent of assets. The fund can also stray slightly outside the usual stomping ground of an Asia manager by investing in other regions – its position in Netherlands semiconductor play ASML, for example. We continue to like this fund but would remind investors that it can perform very differently (hopefully better, but that is not always the case) than its underlying market.

ASIA SINGLE-COUNTRY (2 FUNDS)

New: Ashoka India Equity (AIE)

A fund we recently profiled as part of our Investment Trust in the Spotlight series, Ashoka India Equity only arrived on the scene in 2018 but has already produced enormous returns for shareholders. We introduce it to the list on the basis of a strong process: the investment manager has a large team of researchers who use proprietary analysis to pick the best stocks. What’s more, incentives seem well structured: analysts are partly remunerated based on how much their stock picks have contributed to the portfolio’s performance, and the investment management team does not take an annual fee from the trust. Instead, it takes a performance fee capped at 30 per cent of performance based on rolling three-year periods. Put simply, the fund seems well designed to encourage true stockpicking in a promising market.

We should of course caveat that single-country investments can be highly volatile and idiosyncratic, and that problems in India would naturally spell trouble for the portfolio. It’s also worth noting the trust recently changed the wordings around its investment remit, effectively explaining that the investment team will hold more companies than they used to in part for liquidity reasons. This should hopefully not dilute the portfolio’s potential outperformance.

Fidelity China Special Situations (FCSS)

With shareholders down by some 28 per cent over a one-year period, here’s a name that illustrates the sheer risks involved when investing in individual emerging markets. But this still appeals as a way to access the Chinese market in its own right. Manager Dale Nicholls seeks cash-generative businesses and companies controlled by strong management teams – ideally cases where these factors are not well understood by the market and not reflected in the share price. He also tends to focus on smaller companies, where there should be greater potential for such mispricing.

Like some of his peers, Nicholls has attempted to strike a stoic note amid the various calamities in the Chinese market and economy over the last 18 months. An update from May stressed that the trust remained focused on stocks and sectors that should benefit from China’s long-term structural growth drivers. For one example, think of the likes of insurers benefiting as consumers make more money, potentially boosting the take-up of protection-type insurance products. He has also continued to back the big Chinese tech names, arguing that these have looked cheap on the back of the sell-offs seen during the last year and a half.

Finally, one distinguishing factor of this trust is its focus on unlisted stocks, which made up 14 per cent of the portfolio at the time of the May update. Unlisted positions have spelled trouble for some trusts in the past, but they remain a way of differentiating a portfolio.

Dropped: Goldman Sachs India Equity Portfolio (LU0858290173)

Not a fund that has run into any particular disaster, we drop this for the sake of including the distinctive Ashoka India Equity.

EMERGING AND FRONTIER MARKETS (3 FUNDS)

Much like Asia, the emerging markets in general come with a great deal of promise, but also all manner of problems, from political conflict to economic uncertainty. We stick with some funds that have tended to fare well in a volatile space.

Fidelity Emerging Markets (GB00B9SMK778)

Another fund that has endured an extremely painful 2022, we stick with this name for now on the back of its process having tended to work well over the longer run. The team looks to back companies that are of a high quality, with strong market positions and competitive advantages, but at an attractive valuation. Given the volatility of the emerging market region, this is clearly a sensible emphasis.

It may well be that the fund’s quality focus is hurting it at a time when cyclicals have tended to fare better. And in some previous market rotatio

ns it has also suffered or at least lagged indices, only to then go on to recover.

JPMorgan Emerging Markets Investment Trust (JMG)

Another name with a quality bias and a strong track record that appears to have come unstuck so far in 2022, this trust stays on the list as a more cautiously managed option in a volatile region. The trust’s shares recently traded on a double-digit discount to NAV, presenting an opportunity for patient investors eyeing a possible recovery further down the line.

BlackRock Frontiers Investment Trust (BRFI)

With no direct rivals in the investment trust space now that Jupiter Emerging and Frontier Income is being liquidated, this is now the “go-to frontier markets fund”, as one panellist said. Known for its highly experienced team, the trust has prospered during a good run for its asset class. Despite that it still trades on a double-digit discount, and recently offered a dividend yield just shy of 4 per cent.

A flexible remit allows this trust to diversify positions across some of the especially popular frontier markets, such as Vietnam. While exposed to all manner of idiosyncratic risks and bouts of volatility, the trust continues to stand out as a niche source of growth and even a potential diversifier among your equity exposure. But the word 'niche' is certainly worth emphasising here, and any position in this trust should be sized accordingly.

SPECIALIST EQUITY (4 FUNDS)

From ESG preferences to thematics and sector exposures, plenty of investors like to focus on specialisms in their portfolios. Once again we have saved four spots on the list for funds with more of a specific focus, most of which have admittedly struggled over a tumultuous 12-month period.

Impax Environmental Markets (IEM)

One of the biggest ESG funds available to UK buyers, this trust looks to “enable investors to benefit from growth in the markets for cleaner or more efficient delivery of basic services of energy, water and waste”, predominantly via listed stocks. Like the open-ended Wheb Sustainability (GB00B8HPRW47), Impax has a narrower focus on companies involved in the push towards a more sustainable economy than some of its peers in the ESG universe. That should appeal to those who want a purer form of exposure to the theme, even if that is potentially at the cost of greater volatility at times.

The trust benefits from having an experienced investment team that knows the space well, although that has done little to save it from the growth sell-off of the last year. Shareholders are down by around 18 per cent for the first eight months of 2022 and the big premiums the shares once commanded versus NAV have wilted away. The shares recently traded on a 0.7 per cent premium versus a 12-month average of 3.7 per cent and an eye-watering 12-month high of 16 per cent. The board may have bought back shares in 2022 as a way of preventing a discount from emerging, but the lower premium could still represent a cheap entry point versus some earlier valuations.

We’ve noted in the past that investors will have highly idiosyncratic needs when it comes to ESG. Our recent analysis of the four biggest ESG funds (including Wheb and Impax) may be a good starting point for your research.

Worldwide Healthcare Trust (WWH)

A name that has struggled in recent history thanks to its exposure to biotech – including some in emerging markets – this is still one our panellists rate highly.

Worldwide Healthcare does hold some pharma companies but adds in the likes of biotech names while also picking out small- and mid-cap stocks. Concerns about drug pricing reform in the US, market interventions in China and the broad growth sell-off have all hit its portfolio pretty hard. But some of our panellists have pointed to its exceptional long-term performance on the basis of good stockpicking, its tendency to display lower levels of volatility than many peers, and the fact that the shares still trade on a wide discount to NAV versus their own history.

Riskier positions such as biotech plays have tended to help boost this portfolio’s returns over time, and this still looks a good way to access a sector with exciting prospects. Contrarian investors may also see now as a good time to get in – provided they have a long enough time horizon.

New: Allianz Technology Trust (ATT)

With some chunky losses over the last year or so, this trust has looked like the perfect strategy not to hold in the recent sell-off. But we introduce it to this list at the expense of a well-known rival for the simple reason that it is more differentiated from the tech-heavy US and global equity funds many investors are likely to hold, and therefore more likely to add something new to your portfolio.

We noted in a March analysis that the Allianz trust tends to pay less attention to benchmarks than the rival Polar Capital fund, meaning it loads up less on the US big tech stalwarts that dominate global indices. That can certainly hurt the Allianz portfolio's performance when big tech is dominant, but we feel many investors will already be exposed to such stocks via more generalist funds. The trust has backed some less prominent names, including mid caps, that have ended up making huge gains for the portfolio.

Note that the trust backs those big tech names, too, which could cause you to double up on certain stocks fairly easily. The fund also has a performance fee on top of its ongoing charges, which is unwelcome. Nevertheless, it’s one way of tapping some more niche corners of the tech space.

BlackRock World Mining Trust (BRWM)

A more resilient name amid the inflationary surge of the last year, this fund continues to act as a useful broad play on the mining sector and commodities more generally via its investment in the likes of listed equities. But while that approach helped many investors out in a difficult period, it certainly comes with vulnerabilities now. Numis's Parmar notes that commodities could well struggle against the backdrop of a global economic slowdown, and with the trust’s shares trading on a premium to NAV there’s always a risk that a performance shock could send them into discount territory. Having said that the fund still plays a valid role in a wider portfolio, and its recent dividend yield of nearly 7 per cent might help, too.

Dropped: Polar Capital Technology Trust (PCT)

While still a good fund, we drop this for the simple fact that Allianz Technology is more likely to give you exposures not already present in various generalist equity funds.