Lindsell Train Global Equity, Marlborough Multi Cap Income and Franklin UK Smaller Companies are three of the funds that Architas investment director Adrian Lowcock has bought for his children’s long-term savings. 
Lowcock, who has two children aged 18 months and almost 4 years, pointed out that there are several ways a parent can save for their offspring’s financial future. One of the most obvious is the Junior Isa (JISA) but he is also saving into a Junior SIPP to support his children’s eventual retirements.
“The Junior ISA is an excellent product and it does have a place in my plans for saving for my children. However, I would be concerned about putting all the money in there as it become theirs at 18 years old and they have complete control over what to do with it,” he said.
“I have also started a SIPP for each of my children as in my experience investing is a long-term game – shortcuts rarely pay off. In starting a SIPP for them a little can go a long way. The benefit of being able to make an investment which cannot be accessed for over 50 years is huge. At 5 per cent annual growth a SIPP investment of £3,600 (costing £2,880) investment could be worth over £41,000.”
When choosing funds over such a long horizon, Lowcock cares little for short-term issues such as market volatility, Brexit or the economic landscape. Instead, he focuses on long-term opportunities offered by smaller companies, global equities and equity income.
In the following article, we take a closer look at three of the funds that have made the grade for securing the financial future of the Junior Lowcocks.
Lindsell Train Global Equity
First up is the £4bn Lindsell Train Global Equity fund, which has been headed up by FE Alpha Manager Michael Lindsell since its launch in March 2011. Lindsell was joined on the portfolio by FE Alpha Manager Nick Train and James Bullock in September 2015.
Performance of fund vs sector and index since launch
Source: FE Analytics
As the chart above shows, the fund has performed strongly and is the IA Global sector’s third strongest member since launch after making a 211.85 per cent total return. It’s also in the peer group’s top decile over one, three and five years thanks to the strong run in the quality-growth names it focuses on.
Some 46.6 per cent of the five FE Crown-rated fund’s portfolio is in consumer staple stocks, with 20 per cent in information technology companies and 14.6 per cent in the consumer discretionary sector; unlike many global funds, it has 27.2 per cent invested in the UK – but the US is the largest geographic weighting at 34.3 per cent.
Lindsell Train Global Equity’s largest individual holdings include Unilever, Diageo, Heineken, Nintendo and London Stock Exchange Group. Many of these are longstanding holdings as the managers rarely add new positions or sell out of existing ones if they are still working.
Lowcock said: “The fund is run with a long-term focus on their investment performance. They look for companies with excellent brands, franchises and unique market positions. Of these it is those which are conservatively financed and are able to produce a high and stable return on capital. The fund is highly concentrated with between 25-30 stocks and trading is very infrequent.”
Lindsell Train Global Equity has an ongoing charges figure (OCF) of 0.74 per cent.
Marlborough Multi Cap Income
The next fund on the list combines two of the themes that Lowcock looks for in his Junior ISA and Junior SIPP selections: smaller companies and equity income. The £1.6bn Marlborough Multi Cap Income fund has 34.7 per cent in smaller companies, 34 per cent in mid-caps and 13.5 per cent in micro-caps.
Performance of fund vs sector since launch
Source: FE Analytics
“Stock selection is critical to investing in smaller and medium sized companies and manager Siddarth Chand Lall has a strong discipline to portfolio management,” Lowock said. “He slowly builds up positions in companies adding to investments as he sees evidence of success and sell quickly companies that do not add value, or fail to meet expectations.”
Its top holdings include Intermediate Capital Group, Polar Capital and Phoenix Group. All three of these are in the financials sector, which is the portfolio’s biggest sector exposure at 33.3 per cent of assets.
The process behind Marlborough Multi Cap Income filters a potential universe of around 700 dividend-paying stocks from the AIM through to the FTSE 100 to identify those with the most attractive yields. Close attention is paid to the track record of companies’ dividend payments and whether they have been maintained through downturns.
Since launch in July 2011, the fund has generated a 113.30 per cent total return – which is the second highest from the IA UK Equity Income sector over this period. Furthermore, an initial investment of £10,000 would have seen £4,174 paid out as income.
Marlborough Multi Cap Income has an 0.80 per cent OCF and is yielding 4.47 per cent.
Franklin UK Smaller Companies
Last up is the £304.8m Franklin UK Smaller Companies fund, which is run by FE Alpha Manager Paul Spencer, Richard Bullas and Mark Hall.
“Bullas and Spencer are experienced smaller companies managers. Their approach is very much one of making long-term investments in companies with attractive risk/reward profiles,” Lowcock said.
“The managers are willing to take a contrarian stance when market mispricing creates outstanding investment opportunities. While economic and industry drivers are important considerations, the fund is built from the bottom up, with each stock included in the portfolio on its own merit.”
Performance of fund vs sector and index under Spencer and Bullas
Source: FE Analytics
The fund has made a 159.88 per cent total return since Spencer and Bullas took over in May 2012, which puts it in the second quartile of the IA UK Smaller Companies sector. It has also outperformed its average peer and its benchmark over one-, three- and five-year periods.
The process behind the fund seeks out quality companies that are attractively valued. ‘Quality’ is assessed by looking at a stock’s business risk, management risk and balance-sheet risk.
At the moment, the portfolio’s largest holdings are photonics technology firm Gooch & Housego, pension scheme advisory and compliance services provider Xafinity and custom electronic products business discoverIE Group. Its biggest overweights are to industrial goods & services, real estate and financial services sectors.
Franklin UK Smaller Companies has an OCF of 0.83 per cent.