For those with a long-term horizon, there are a number of top-performing high-growth equity funds and investment trusts that are worth considering.
Invesco Perpetual European Opportunities
It is of no surprise that European funds have been among the most affected by the tensions in the eurozone. According to FE data, the average portfolio in IMA Europe ex UK is down 17.22 per cent in the last 12 months.
While many, including IFA Brian Dennehy, expect the fall in European markets to endure for the time being, a growing number of fund managers are increasing their exposure to risk assets, citing too-good-to-be-true valuations.
One fund that could benefit from these low valuations once markets do bounce is the five crown-rated Invesco Perpetual European Opportunities fund, managed by Adrian Bignell.
Performance of fund vs sector and benchmark since launch
Source: FE Analytics
The £28.6m portfolio is different in its approach compared with the typical Invesco Perpetual fund, in that it is significantly more volatile than its peers and tends to outperform in up-markets.
In 2009, for example, Bignell delivered 69.53 per cent, compared with 19.42 per cent from its Europe ex UK sector average and benchmark. The second-best performer in the sector returned 39.83 per cent.
It is susceptible to big losses during down-periods, however, reflected by its underperformance in both 2008 and 2011.
The fund has a minimum investment of just £500 and a total expense ratio (TER) of 1.75 per cent.
Fidelity South East Asia
Many are tipping south-east Asia to be the biggest growth story of the next decade.
In a recent interview with FE Trustnet, FE Alpha Manager Martin Gray said that on a long-term basis, the region is one of the most appealing in the market at present, while JOHCM’s James Syme tipped Thailand and Indonesia to continue their upward surge.
In spite of its strong run in recent years, valuations in south-east Asia have declined over the past 12 months, which many higher-risk investors see as a buying opportunity.
Launched in 1984 and with £2.3bn AUM, Allan Liu’s Fidelity South East Asia fund is the highest-profile of its kind in the open-ended universe.
The fund can invest in companies throughout the Pacific Basin, including China, although it also has significant exposure to the likes of Korea, Malaysia and Thailand.
It has returned 240.45 per cent in the last decade, compared with 165.62 per cent from its MSCI Far East ex Japan benchmark. Liu has also underperformed over five years, but has fallen short over one and three.
Performance of fund vs index over 10-yrs
Source: FE Analytics
Liu has a particularly strong record in rising markets, thanks to his bias towards mid cap growth stocks.
The manager acknowledges there are significant headwinds to the global recovery at present, but believes south-east Asia and China in particular are over the worst.
"The riskiest moment was the third and fourth quarter last year when there was still inflationary pressure in China and there was a concern the government wasn’t able to respond," he said.
"However, the government came up with the measures to bring inflation down."
"Valuations have come off significantly and we believe investors can make very good returns even in the medium-term at this time," he added.
Fidelity South East Asia has a minimum investment of £1,000 and a TER of 1.76 per cent. Liu has headed up the portfolio since August 2003.
Fidelity European Values
The Fidelity European Values portfolio is a good closed-ended option for investors who believe in a European recovery.
The fund has had a tough time in recent years, underperforming its FTSE World Europe ex UK benchmark every year between 2006 and 2010; however, the appointment of Samuel Morse in January 2011 has seen a big improvement in the fund’s performance.
According to FE data, the fund is down just 2.52 per cent during this time, compared with losses of 17.45 per cent from its benchmark.
Morse also heads up the Fidelity European fund – a £2.4bn portfolio which is top-quartile in its IMA Europe ex UK sector over one- and three-year periods.
In an interview with FE Trustnet last year, Winterflood’s James Brown said he was confident of an improvement in the trust’s performance under Morse.
However, in spite of its strong run, Fidelity European Values is on a discount of 13.7 per cent – marginally wider than the average fund in the IT Europe sector.
Morse’s portfolio has a TER of 1.06 per cent and is currently fully invested in the equity market. It has a yield of 2.54 per cent.
JPM Natural Resources
A slow-down in the global demand for commodities – particularly in China – has resulted in a poor run for the sector's funds in 2011 and 2012.
However, with many satisfied that a Chinese hard landing has already been averted, many feel commodities could be due another surge.
Perhaps the highest-profile commodities fund is Neil Gregson’s JPM Natural Resources, which was launched in June 1965.
In spite of significant downturns in 2008 and 2011, the fund is one of the best-performing vehicles in the entire IMA unit trust and OEIC universe over the last decade, with returns of 309.49 per cent.
Performance of fund vs index over 10-yrs
Source: FE Analytics
Neil Gregson took over as lead manager of the portfolio following the retirement of industry icon Ian Henderson back in January this year. While some saw the exit of the highly regarded manager as a negative, Hargreaves Lansdown’s Meera Patel was keen to allay these fears.
"Neil has already had a year at JPM and has been involved in the sector since the late 1980s. Ian will not be leaving as manager until January, so I see no reason why investors would pull their money out," she said.
The £1.7bn fund has a minimum investment of £1,000 and a TER of 1.68 per cent.
BlackRock Latin American IT
The likes of Colombia and Peru have been the best-performing equity markets of the last decade, but experts believe there is still plenty of scope for further growth.
The MSCI Emerging Latin America index is down 14.64 per cent over the last 12 months, and some open- and closed-ended funds – including Will Landers’ BlackRock Latin American IT – are down even further. The recent sell-off has seen the trust’s discount widen to 5.3 per cent.
The £297m portfolio has a far better long-term record though, up more than 537 per cent over the last decade, compared with 517 per cent from the index.
Brazil is Landers’ biggest regional position, accounting for 64 per cent of assets under management. Vale and Petrobras are among the trust’s largest stock positions.
BlackRock Latin American is particularly cheap for a trust with an emerging market-focus, with a TER of just 0.9 per cent. Landers has been lead manager of the portfolio since March 2006.