The manager’s five crown-rated CF JOHIM Portfolio tends to invest directly in shares rather than collective vehicles, because it means he does not have to incur a double layer of charges. When he does hold collectives, he tends to hold in-house portfolios to keep costs to a minimum. However, Percy decided to bite the bullet and buy the now soft-closed Findlay Park Latin American fund in 2009 because it was such a strong option – a decision he has been rewarded for.
"When we look to other fund houses, the portfolios really need to justify their existence," he said.
"One of the best investments I ever made was to buy the Findlay Park Latin American fund. It is still part of the portfolio and I also hold Findlay Park American."
"The Latin American fund is much, much smaller at £1.5bn. It has been in the fund since May 1999 and I like it because they run a concentrated portfolio of domestically orientated companies, such as the consumer and financial sectors.”
Percy (pictured above) says he likes the fact that the team-managed fund is high conviction in its approach, and is not afraid to venture away from the benchmark.
"There are other Latin American funds, but the indices are dominated by global corporates such as Vale and Petrobas," he explained.
"The managers at Findlay Park don’t concentrate on those companies and instead focus on financial, healthcare and discretionary stocks that will benefit from those countries’ emerging middle classes."
"That has meant they have added a lot of value and though they could analyse these sorts of companies from a computer screen, they really like to get to know the companies and they go out and visit them on a regular basis."
Percy bought the offshore fund back in 2009 and its numbers make for very good reading.
According to FE Analytics, the fund has returned 154 per cent over that time. As a point of reference, the MSCI EM Latin America index has returned 48.35 per cent over the same period.
Performance of fund vs index since May 2009
Source: FE Analytics
Findlay Park Latin American still sits in Percy’s top-10 holdings and currently makes up 2.1 per cent of his portfolio.
"I must admit our timing when we bought the fund was good. We bought it in May 2009 just at the beginning of the most recent up-cycle and we have been adding to our position ever since as more money came into my fund," he said.
"In terms of their philosophy, I admire and respect their bottom-up focus and their rigorous analysis. They also produce very good and informative newsletters, which, while they are long, are well worth reading," he added.
Our data shows nine other IMA funds count Findlay Park Latin American as a top-10 holding.
Percy points to another externally run fund as one worth splashing the cash on.
Although the fund’s largest individual holding is the Waverton European fund, which is run by JOHIM, his second-largest external holding is the five-crown rated Montanaro European Smaller Companies portfolio.
The £1bn Ireland-domiciled fund, managed by Charles Montanaro, was launched in November 2002. Algernon holds the open-ended version of the portfolio, though Montanaro also runs an investment trust version as well.
Since its launch, Montanaro European Smaller Companies has returned 332.37 per cent, beating its benchmark – the MSCI Europe Small Cap index – which has returned 313.35 per cent over the same period.
Performance of fund vs index since Nov 2002
Source: FE Analytics
The fund has been a lot less volatile than its benchmark over that time. Despite its long-term outperformance, Montanaro European Smaller Companies has fallen short of the index over one and five years.
Unlike other European funds, Montanaro has the ability to invest in the UK. He has taken full advantage of that, with 39 per cent of the portfolio listed in companies that trade on the London Stock Exchange.
He also has high weightings to Sweden and Germany.
The fund’s largest sector weighting is to industrials, making up 23 per cent of the portfolio. The fund has no exposure to telecoms and utilities.
Montanaro European Smaller Companies has an ongoing charges figure (OCF) of 1.69 per cent; however, it does implement a performance fee.
Percy has managed his £55.1m CF JOHIM Portfolio since November 2011. Over that time he has returned 43.89 per cent, while his peer group composite has returned 31.76 per cent.
His fund requires a minimum investment of £50,000 if bought directly, and has an OCF of 1.35 per cent. It is available on platforms including Novia and Nucleus.
A recent FE Trustnet article explored how an obsession with cost can ruin investors’ potential for returns.
