Brexit rumblings have now dominated discussions for 18 months, and with the latest round of negotiations reaching an impasse at a crucial juncture, market participants and commentators are far from pleased.
European fund houses have already begun to take action, with several launching eurozone-focused equity strategies that explicitly omit UK exposure to help shield against the uncertainty of Brexit.
However, as the deadline for agreement over exit terms appears on the horizon, are pan-European fund buyers missing out on UK-focused fund managers that offer a chance to tap the strength in this market?
Among the top 20 performing fund managers or manager teams on a three-year absolute return basis to the end of October 2017, there are a total of 24 separate strategies contributing to performance over this timeframe. Of those, just four are registered for sale in markets beyond the UK.
Julian Fosh & Anthony Cross, Liontrust
Three-year total return (October 2014-October 2017): 46.69%
Only two of the four funds (italicised above) overseen by the AAA-rated pair Julian Fosh and Anthony Cross can be accessed by investors beyond the UK. But for fund buyers in France and Austria, there is potential to tap into the Dublin-domiciled versions of the long-running UK Growth and Special Situations approaches.
The pair sit 19th out of 20 for their performance, with a return of 46.69% in sterling terms. This compares with a 31.79% return by the average of the 162 fund managers active in the Equity – UK (All Companies) sector over the same period.
Georgina Hamilton & George Godber, Polar Capital
Three-year total return (October 2014-October 2017): 47.75%* (*based on Hamilton’s performance)
This one takes some explaining, as Citywire A-rated Georgina Hamilton and George Godber only joined Polar Capital from Miton early in 2017. The pair are recognised here for their long track records, which are largely drawn from their time at their former employer.
However, they have slightly different track records due to different stints on the now-closed FP Miton Undervalued Assets fund.
Upon joining Polar Capital, the pair were handed the Dublin-domiciled Polar Capital UK Value Opportunities fund, which is a Ucits vehicle registered in Ireland, UK, Jersey and Guernsey. While this limits pan-European appeal, its Ucits format makes it more easily expandable to a wider market should the need arise.
Neil Hermon, Janus Henderson
Fund: Henderson UK Alpha GBP
Three year total return (October 2014-October 2017): 50.54%
Sitting fifth for three-year numbers is Citywire AA-rated Neil Hermon, who has overseen the Henderson UK Alpha fund since January 2013. He was joined by Indriatti Van Hien in September 2016 after Jamie Ross stepped down. The fund is UK-domiciled but also registered for sale in France and Chile.
While the pair are a long way off Keith Ashworth-Lord’s table-topping performance on the CFP SDL UK Buffettology General fund, which returned 80.2%, the fund’s return is a healthy 50.5%, which sits well above the sector average for this timeframe.
In the £465 million (€525 million) fund at present, the fund managers focus largely on financials, which account for one quarter of overall exposure at a sector level. Industrials (18.6%) and consumer services (15%) are also well represented.
Hermon also oversees the Henderson UK Smaller Companies fund.