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The two sectors this top French selector is shunning

The two sectors this top French selector is shunning

Healthcare and infrastructure rank as the most unloved sectors in today’s environment for French fund selector Thierry Guérillot.

The head of fund selection at Myria Asset Management said there are very few market segments his team don’t invest in across their 120-fund shortlist, with the exception of these two sectors.

Guérillot told Citywire Selector his team of fund selectors haven’t been able to find strong investments to help outperform the MSCI World index in either industries.

Guérillot said the biggest challenge he faces is finding regular alpha in markets because of the growth in influence of ETFs, particularly in periods of hard rotation in sector and style.

‘Clearly it was the characteristics of 2016, it was not such the case last year with the exception of the third quarter, which was difficult. In the end quality pays back but you need to be patient and not to panic during high-rotation times in the markets.’

Building expectations

Despite the difficulty in finding viable investments, Guérillot expects opportunities to start to arise this year in infrastructure. He said the team is therefore considering Lazard’s dedicated infrastructure fund.

As for healthcare, he said: ‘We were quite cautious before the election in the US and considered that the market was expensive at the time.

'Also, we didn't have any visibility on the political decisions that could have been made by either Clinton or Trump so we preferred to get out of the market and not invest in the segment.’

While not currently invested in healthcare, Guérillot does not rule it out of his asset allocation, as he said the sector is beginning to look more appealing than it did this time last year.

High-flying funds

Inversely, the area that proved to be the biggest performance driver in 2017 was the European equity market. However, Guérillot said the most successful fund pick was Stryx America, a US equity fund which has shown consistent returns.

‘Probably for its regularity, the Stryx America fund is considered to be our best. It is quite rare to find out an asset manager who outperforms regularly the US equity markets.’

In the EM space, GemEquity was highlighted for its stellar returns. Even with this investment, Guérillot confessed that one of his major regrets for 2017 is not having been more EM exposure.

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