2014 witnessed major swings in the performance of several investment themes: a fall in biotech and social media shares in March and April; a reversal in the fortunes of medium-sized companies; disappointing performance from European shares, accompanied by a sharp decline in the euro; and a collapse in the oil price in the second half of the year.
In all it was a challenging year for investors, including many fund managers in the Global sector who struggled to keep pace with the broader global stock market. While the average fund in the sector posted a positive return of 7.4%, this falls noticeably short of the 11.2% delivered by the MSCI AC World Index.
The Artemis Global Growth Fund, managed by Peter Saacke, is one fund which proved an exception to the rule, after growing by 17.1%, though please remember past performance is not a guide to future returns. Positive contributions came from an assortment of companies including: Taiwanese optical-lens maker Largan Precision; American supermarket chain Kroger; and Centene, a US healthcare provider.
Exposure to China also provided a boost to returns. Peter Saacke has increased the fund's weighting in Chinese shares in recent years to around 13% of the portfolio. Sentiment towards the region has remained depressed reflecting the country's economic uncertainty, leaving its stock market undervalued compared with many other global markets. China's stock market has performed well despite remaining out-of-favour with many investors and some companies have continued to deliver positive earnings surprises, according to Peter Saacke.
The manager's focus on undervalued areas of the market turned his attention to Europe last year. Its markets look good value relative to other developed markets and the fund's exposure to the region was increased towards the end of last year. In Peter Saacke's view, a number of European companies are mispriced relative to their growth prospects and could be set to benefit from cost cutting measures, falling input costs (due to falling commodities prices), and a weaker currency. The latter, in particular, could benefit exporters as a weakening currency makes exports cheaper for foreign buyers. Current positions include Daimler, the German-based automotive manufacturer.
Our view on this fund
The Artemis Global Growth Fund is managed using SMART-GARP - an in-house quantitative system which seeks companies delivering positive earnings surprises, and tends to lead to a bias towards companies that have fallen out-of-favour and deemed to be undervalued. Over the longer term the fund's process has led to strong performance: over the last decade, the fund has delivered a return of 162.1%* against 140.4% for the benchmark index and 105.3% for the average fund in the sector.
|Annual percentage growth|
| Feb 10 -
| Feb 11 -
| Feb 12 -
| Feb 13 -
| Feb 14 -
|Artemis Global Growth||25.9%||-1.3%||20.7%||10.2%||24.2%|
|MSCI AC World||19.3%||-1.5%||15.7%||6.7%||19.6%|
Past performance is not a guide to future returns. Source: Lipper IM* to 02/02/2015
That said it has been a volatile ride and the SMART-GARP model has its limitations. The 2008 financial crisis, for example, was a particularly testing period. Peter Saacke has taken some steps to make improvements to the model; however, we would like to see further evidence of how the fund fares in a turbulent market. In the meantime, we would expect performance of this adventurous fund to remain volatile relative to its peers. The fund does not currently feature on the Wealth 150 list of our favourite funds across the major sectors.