Investors shouldn’t be worried about the performance of Artemis Global Income, according to market commentators, despite the fund underperforming the MSCI World in 2016 for the first time since its launch. 
In a difficult year for active managers, particularly income-focused managers, the fund run by Jacob de Tusch-Lec (22.49 per cent) returned 5.75 percentage points less than the index (28.24 per cent) for the first time in six calendar years.
AJ Bell head of fund selection Ryan Hughes said: “Investors shouldn’t be worried – no one has an investment process that wins year in and year out; it’s just not reality.
“Last year was quite a rotational year if you think about the journey the market went on with a very ugly start, a bit all over the shop in the middle and a very strong finish.
“That would test all kinds of investment processes and philosophies and Jacob (pictured) was on the wrong side of one or two of those trades. But you look over the long term track record that he’s got over a number of years so I have absolutely no worries about how he invests.”
Performance of fund vs sector and benchmark since launch
Source: FE Analytics
Indeed, since launch the £3.4bn fund has returned 167.87 per cent, ahead of the index (122.23 per cent) and the IA Global Equity Income sector (103.51 per cent).
Additionally, the fund outperformed the index in every calendar year until 2016 although it was still a top quartile performer over the year.
While the long-term track record is extremely strong, however, it can never hurt to diversify, and below FE Trustnet asks the commentators which fund they would hold alongside Artemis Global Income.
Andy Parsons, head of investment research at the Share Centre, says FE alpha Manager James Thomson’s Rathbone Global Opportunities provides a nice blend with Artemis Global Income.
He said: “James has been at the helm since 2001 and he’s managed money over a considerable period of time and over many market conditions.
“It’s a concentrated portfolio of 40-60 stocks and it has a very strong large cap presence with a flexible unconstrained mandate.
“He generally likes to have no more than 4 per cent in a single security so you know he is going to limit his exposure and protect himself. He can have a greater mid-cap presence than a lot of people albeit at the moment it’s mostly large cap so he moves to where he sees value.”
Over the past three years the fund is ahead of its benchmark and sector, returning 102.51 per cent.
Performance of fund vs sector and benchmark over 5yrs
Source: FE Analytics
“Over three years they are 0.78 correlated so that’s quite nice – they’re not too heavily correlated – and even at 1 year it’s at 0.8,” Parsons said.
As well as this, the Rathbone fund has a 57 per cent weighting to the US, while the Artemis fund is overweight Europe and underweight the US, meaning investors get sector diversification from owning the two together.
Additionally Thomson can have a greater exposure to mid-caps, Parsons says, though currently it is mainly made up of large-caps.
Both AJ Bell’s Hughes and Chase de Vere head of communications Patrick Connolly suggest investors look at the £5.5bn Newton Global Income.
Connolly said: “They have different styles and typically hold different stocks, although both are very good funds in their own right.”
Run by Nick Clay since the end of 2015, the Newton fund has returned 39.94 per cent since he took over placing it in the top quartile of the IA Global sector – though 1.87 percentage points behind the FTSE World index over this period.
Performance of fund vs sector and benchmark during manager tenure
Source: FE Analytics
Hughes said: “They [Artemis and Newton] have very different approaches and have a real focus on dividend as an out and out first and foremost and that fits nicely alongside Jacob who is an income investor but is thinking more about getting a return from capital growth and income.
“I always think of Jacob as a total return investor whereas Newton’s approach points them more towards out and out income and I think that pushes them into different sectors.
“Newton will be invested in the areas that are always offering a higher yield than the market and Jacob will be far more flexible and rotational and go where the opportunity fits.
“Therefore I think those two together make quite a nice combination because you’ll get quite a deep diversification across sector and across country importantly.”
Fidelity Global Special Situations
Adrian Lowcock, investment director at Architas, suggests investors look at Fidelity Global Special Situations, run by FE Alpha Manager Jeremy Podger.
The four crown-rated, £2bn fund has been a top quartile performer since Podger took charge in 2012, returning 124.37 per cent.
Performance of fund vs sector and benchmark during manager tenure
Source: FE Analytics
“The manager has a flexible but pragmatic approach and is looking to invest into three types of companies,” Lowcock said.
First are those undergoing corporate change – either by restructuring or other means – which tend to have a value bias.
The second type are those he calls “exceptional value with the ability to be re-rated” which tend to be more cyclical in nature. Finally, Podger also looks for unique businesses - those companies that have pricing power and strong cash generation.
“The fund has a greater weighting to the IT and Software sectors and the US compared to the Artemis Global Income fund and because of its recovery bias it is a natural complement to a global income fund,” Lowcock said.