Funds in Focus – Where to invest?

October 4, 2021
Harvest News
where to invest

Fund in Focus – Jupiter Contingent Capital Fund

September 2021

This month’s fund in focus is the Jupiter Contingent Capital Fund. This fund invests in a class of bank bonds (Contingent Capital or ‘CoCo’ Bonds) which were created in the wake of the Global Financial Crisis in 2008. They have an option attached to them whereby the issuing bank can convert the bonds to equity but only in very extreme financial circumstances. Because of this convertibility, the regulators will allow them to be counted as Tier 1 capital which is a very attractive feature for the issuing bank. We would see the risk of conversion as very low given the balance sheet strength of European banks at present.  However, because of this convertibility option, they do not fit the investment criteria of most bond funds and therefore trade at a significant discount to mainstream bond markets.

They provide alternative benefits to global bonds as investors can benefit from stock price gains. They also preserve some of its value if markets were to fall. They are also deemed ‘safer’ to an investor than common shares as the value of the convertible bond will only fall to the value of the bond floor. The Jupiter Contingent Capital fund has many benefits including a compelling yield, good management, thorough and in-depth selection process, and is well spread in terms of credit risk.

  • Income: Target 6% income per annum.
  • Portfolio of High Yielding Bank Bonds
  • The Fund will primarily invest fixed and variable rate debt securities issued by financial institutions with minimum capital requirements, such as insurers and banks.
  • Low Fund volatility and low fund charges
  • Good track record since inception

The standout attraction of this fund for investors is clearly its very high dividend yield. The current yield is 5.7% and this is paid out to investors quarterly. This may be of particular interest to ARF investors who are looking to generate income from their investment portfolio. If you would like to discuss this fund or look at other income opportunities, please contact your Private Client Adviser.

where to invest my pension

Fund in Focus – Aberdeen Asian Income Fund

August 2021

This month’s fund in focus is the Aberdeen Asian Income Fund. Having emerging markets exposure in your investment portfolio is becoming increasingly important as Asia continues to deliver growth well above the world average. While Covid inevitably impacted over the past eighteen months, all the evidence would suggest that Asia is coming out of the blocks quickly post the pandemic. As a result the outlook remains positive.


The US – China geopolitical tensions will result in China becoming more self – sufficient over the coming years. In addition, other countries such as Vietnam and India are benefitting from the ongoing relocation of basic industries away from China to lower cost economies. The investment opportunities presented by these trends are captured by the active management style of this fund. The fund is well diversified across many sectors including domestic consumption, technology and green energy. However as an income focused fund, its exposure to some of the very high growth sectors is limited and it will tend to underperform the market during strong growth phases. On the other hand its volatility is two thirds of the market and it will tend to underperform during volatile phases. A particularly attractive feature is the high dividend yield. The current annual yield is 4% which is paid out to investors quarterly. This may be of particular interest to ARF investors who are looking to generate income from their investment portfolio.

If you would like to discuss this fund or look at other income opportunities, please contact your Client Advisor or contact us on 01 2375500. Investment in this fund will allow you to gain a liquid and diversified exposure to Emerging Markets, managed by a specialist, well recognised investment manager, while also delivering a steady income.

Fund in Focus – First Sentier Global Listed Infrastructure

July 2021

Following the passing of the $1 trillion Biden Infrastructure Bill in the US this week, our monthly fund in focus is the first Sentier Global Listed Infrastructure Fund. Biden’s plan is the most substantial expenditure on the nation’s roads, bridges, waterworks, broadband and the electric grid in decades. We can also assume that this plan will pave the way for global governments as it highlights the importance of strong and stable infrastructure for economies.

  • Listed infrastructure provides essential services to society, making it less sensitive to the economic cycle.
  • The fund invests in a variety of different types of infrastructure assets globally giving a good geographic and sector spread.
  • Growth is being driven by long term structural themes such as the build-out of renewable energy, the need
    to ease urban congestion and increasing reliance on mobile data.
  • Investment in infrastructure is key when creating a well-balanced investment portfolio as these types of investments have tended to be less volatile than other equity classes.
  • Infrastructure can be used as a lower volatility complement to global equities.

Fund in Focus – Guardcap Global Equity Fund

June 2021

For our monthly Fund in Focus we are highlighting the Guardcap Global Equity Fund. This a high conviction equity fund which targets companies with strong positions in growing niche markets, while generally avoiding the big names The philosophy of the fund is that long term sustained growth drives returns.

  • The fund includes a very select, thoroughly researched concentrated portfolio of quality companies (20-25) selected based on their track record and potential of delivering sustainable capital growth with great diversification across various sectors and regions.
  • Each company having significantly better quality and growth characteristics than the market average, and each being undervalued in relation to its long-term future earnings and cash flows at the time of purchase.
  • The fund managers follow a rigorous process where a large pool of stocks is reduced to those which best fulfil such criteria as sustainable competitive advantage over other similar companies, excellent management and a strong financial history and outlook.
  • Income and capital gains from the Fund are reinvested.
  • The fund provides a scale of opportunity for investors and would be considered a core global equity holding in a portfolio for both personal and pension investors.
Where to Invest

Fund in Focus – Blackrock World Mining Trust

May 2021

For our monthly Fund in Focus we are highlighting the Blackrock World Mining Trust. This fund is designed for investors who seek income and growth and intend to invest for five years or longer.

The mining and commodities sector is benefiting from the world’s most compelling long-term trends from digital transformation, to the sustainability agenda, to gold and precious metals. Targeting income and capital growth, the Trust provides a diversified blend of companies designed to benefit from the changing global economy.

  • > The trust provides exposure to the global hard commodities market
  • > It is very well diversified across a wide range of commodities.
  • > Net dividend yield target of 3.5% per annum.
  • > Managed by one of the largest global asset managers.

This investment would be suited to investors looking for a specialist commodities trust to provide long-term diversification of income and capital, geared to the changing dynamics of the global economy.

Rathbones Ethical Bond Fund – April 2021

For our monthly Fund in Focus section we have selected a component fund of our ESG Investment Strategy – the Rathbones Ethical Bond Fund. This fund aims to deliver both income and growth on a consistent basis to its investors. The fund also applies strict ESG criteria to the bonds it purchases focuses solely on bonds issued by companies who measure up to the required standards.  Thirdly, the Fund aims to deliver a greater total return than its benchmark, the Investment Association (IA) Sterling Corporate Bond sector over any rolling five-year period. The fund has been successful on all three counts and has consistently outperformed its benchmark over the past ten years.

  • The fund is a traditional socially responsible investment fund.
  • Experience of managing ethically screened private-client investment business.
  • Engagement, governance, and stewardship managed by a central governance committee.
  • Open and transparent ethical criteria and reporting lines.
  • The fund targets an investment grade high yield with a strong ethical overlay.
  • Quarterly pay-out of income.

To make sure that investments are suitable, the fund manager has access to Rathbones’ dedicated ethical, sustainable and impact research team.  Together, this actively managed fund applies ethical screens to assess potential investments; having confidence that long-term growth can be achieved by companies which conduct their business and apply capital responsibly.

where to invest

The fund has been a consistent outperformer over the past few years but particularly so over the past year. The fund offers a very broad global exposure to the ESG opportunity and is a very appropriate core bond holding in client pension and investment portfolios.

Schroder Sustainable Growth Fund – March 2021

For our monthly Fund in Focus we have highlighted one of the funds in our ESG Investment Strategy. The Schroder Sustainable Growth Fund aims to provide capital growth by investing in equities of companies worldwide which meet the investment manager’s sustainability criteria which include the following:

  • managing the business for the long-term
  • recognising the company’s responsibilities to its customers, employees, and suppliers
  • respecting the environment

In addition, the investment manager believes that when aligned with other drivers of growth, this can result in earnings stronger growth which is often under appreciated by the market. Issues such as climate change, environmental performance, labour standards, or board composition that could impact a company’s value will be considered in the assessment of companies.

where to invest
Source Financial Express

The fund has been a consistent outperformer over the past few years but particularly so over the past year. The fund offers a very broad global exposure to the ESG opportunity and should be a core equity holding in client pension and investment portfolios

2X Midcap Library Fund – Feb 2021

The 2X Ideas Midcap Library fund is a Swiss based actively managed global equity fund which targets companies with valuations between US$2 – 30 billion. The management style is highly research driven, seeking out companies around the globe with very strong positions in their own market niches and with the potential to deliver growth well above the average over the long term, largely independent of economic cycles. While none of the 100 companies held by the fund could be regarded as small companies, the majority are not household names with the result that the investor is being given an exposure to growth opportunities not commonly found in other global equity funds. The investment approach taken by the fund has proven itself against the market over the last number of years. *2xideas vs MSCI World Perf. 1- year graph

Source Financial Express

NextEnergy Solar Fund Limited

December 2020

  • UK’s largest solar farm operator
  • 90 separate acquisitions of solar projects
  • Market capitalisation £630 million
  • Annual dividend yield c.6% (paid quarterly)
  • Gross return of 45% over past 5 years

‘Every hour the world receives enough energy from the sun to power the entire planet for a year’.

Background

NextEnergy Solar Fund Limited (NESF) is a solar infrastructure investment company primarily focused on the UK. As at 30 September 2020 the Company has completed 90 separate acquisitions of solar projects with total capacity installed of 755MW and total invested capital of approximately £950m. The company’s solar farms are almost all UK-based although it does own a small number of installations in Southern Italy and is seeking further opportunities outside of the UK. The Company has an investment limit of up to 30% of the Company’s gross asset value (GAV) in solar assets outside the UK. Currently, the non-UK investment represents 12% of GAV.

Investment Strategy

NESF’s investment objective is to provide ordinary shareholders with attractive risk adjusted returns, principally in the form of regular dividends, by investing in a diversified portfolio of primarily UK-based solar energy infrastructure assets. As a result, returns to shareholders are primarily in the form of annual dividends rather than capital growth. Based on its current profile of investments, we the income is secured for a long time to come. The company should also be a beneficiary of the UK Governments new ‘Ten Point Plan for a Green Industrial Revolution’ The company’s shares are listed on the London Stock Exchange and are freely tradeable.

ESG

NESF invests with a view to holding its solar assets until the end of their useful life. NESF are committed to all ESG (Environmental, Social and Governance) principles and responsible investment. They are on a mission to generate a more sustainable future by leading the transition to using more clean energy. They believe that solar is the key technology for the transition away from fossil fuels towards a greener economy. By generating clean energy, NESF avoid 307,500 tonnes of CO2 emissions per annum while powering homes sustainably. Their ESG policy re-enhances their commitment to tackling climate change. You can read further into NESF’s ESG policy online at www.nextenergysolarfund.com/esg

Historic Performance

*Source – Financial Express


Guardcap Global Equity Strategy

August 2020

Fund Size                            €1.46 billion

AMC                                      0.8%

Trading Currency               Euro

Liquidity                             Daily

Income                                 No

For this Fund in Focus, we have selected the Guardcap Global Equity Strategy, which has been a longstanding core pick for our clients looking to gain exposure to global equities. This fund is a concentrated, bottom-up strategy, managed by GuardCap Asset  Management, a specialist firm located in London,  which is part of the Guardian Capital Group. The GuardCap Global Equity team is distinguished by its highly focused long-term thinking, which enables its strategies to harness a sustained long term outperformance against global equity markets.

The fund seeks to invest in companies with strong balance sheets and who offer the genuine prospect of delivering long term growth. For Guardcap’ managers, very few companies meet their  exacting criteria. This no compromise attitude towards stock picking is backed by a highly rigorous and detailed investment process, with in-depth written reports and models prepared on each company considered for inclusion. The net result is a highly concentrated strategy offering unique exposure to the potential arising from sustainable, long-term growth companies. Most importantly, it has been a consistent outperformer over a long period. The fund size is €1.46 billion and holds c.25 stocks.

Geographic and Sectoral Exposures

where to invest my pension fund
Source Financial Express
Where to invest my pension fund
Source – Financial Express

Historic Performance

The fund has been a consistent outperformer over a sustained period and while the price fell sharply in March 2020 along with equity assets across the globe, it recovered very quickly and ahead of world markets.

Where to invest my pension fund
Source Financial Express

Updated – August 2020

This marketing information has been provided for discussion purposes only. It is not advice and does not take into account the investment needs and objectives, financial position, risk attitude, liquidity needs, capital security needs and/or capacity for loss of any particular person. It should not be relied upon to make investment decisions.
Warning: The figures refer to the past. Past performance is not a reliable indicator of future results.
Warning: The return may increase or decrease as a result of currency fluctuations.
Warning: If you invest in this product you may lose some or all of the money you invest.

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Tel: +353 (0) 1 237 5500, Fax: +353 (0) 1 237 5555. Email: justask@harvestfinancial.ie