Thornbridge Investment Management has taken over the management of the JM Finn Global Opportunities Fund which will be renamed the PFS Thornbridge Global Opportunities Fund from 1 October. The fund will continue under the tenure of Anthony Eaton who has been managing the fund for over 10 years.
Anthony Eaton and his assistant manager Isabella Galliers-Pratt believe the rise of the emerging market consumer is a ‘game changer’. It is this view that dominates their investment approach. Incomes are rising, driving a growing demand for food, healthcare, and a western standard lifestyle. Their focus is to identify businesses worldwide benefiting from this trend.
The portfolio is structured around three key themes: what people want; what people need; and the delivery of these products to consumers.
What people want
This portion of the portfolio is dominated by consumer goods and pharmaceutical companies. A lack of trust in domestic brands and the association with a western lifestyle means brands such as Colgate, Estée Lauder and Nestlé are highly coveted by consumers in emerging markets. The majority of holdings in this area are US-listed stocks. However, it also includes stocks such as Curro, which operates private schools in the South African bush.
What people need
This portion of the portfolio is comprised mainly of food companies. The managers have focused on firms which dominate in their industry and can benefit from a wider demand for food. This includes McCormick, a US spice producer which serves 9 out of the world’s top 10 multi-national food manufacturers and AAK, the world’s leading manufacturer of vegetable oils.
Delivery of needs and wants
Increased demand means emerging markets are importing more and more each year. According to the managers, travel (including the movement of raw materials, finished goods and business trips) grows at a faster rate than the growth in trade itself. The managers have invested in areas such as logistics and transportation to profit from this. It takes a great deal of time and investment to open new ports and airports. As the majority of imports and exports travel through at least one of these hubs, the managers are confident those already in existence will benefit from the increased traffic. Aside from the import of goods, airports such as those in Thailand also benefit from increased tourism while Delhi airport, for example, is receiving greater levels of business travel.
Our view on this fund
Overall, the fund has been through a difficult period compared with the wider global market over the past few years. Given the fund's approach, its performance tends to be closely linked to that of higher-risk emerging markets. This bias helped the fund outperform the MSCI AC World Index from launch to December 2010. However, since this time emerging markets have significantly underperformed developed markets and this has hurt the fund's performance. Emerging markets have been particularly volatile in recent weeks due to concern over slowing growth in China. However, the managers maintain their long term view that rising incomes in these areas will drive a growing demand for food, healthcare, and a western standard lifestyle.
Performance of the JM Finn Global Opportunities Fund since launch relative to the MSCI AC World Index
Source: Lipper IM to 01/09/15
The PFS JM Finn Global Opportunities Fund is shown relative to the MSCI AC World Index. When the line is rising, the fund is outperforming the index and underperforming when the line is falling.
This fund was removed from the Wealth 150 list of our favourite funds across the major sectors in January 2014 after our analysis highlighted concerns over the manager's ability to add value through stock selection. Since this time, the fund has lost -2%, underperforming its peers by 7.5% and the MSCI AC World Index by 8.9%*, though past performance is not a guide to the future. We currently have higher conviction in other funds in this sector, and our favoured funds currently feature on the Wealth 150.
|Annual percentage growth|
| Sept 10 -
| Sept 11 -
| Sept 12 -
| Sept 13 -
| Sept 14 -
|JM Finn Global Opportunities||11.77%||-0.05%||12.98%||6.11%||-1.58%|
|MSCI AC World||5.87%||9.36%||19.09%||13.22%||-0.6%|
Past performance is not a guide to future returns. Source: Lipper IM* to 01/09/2015.