David Coombs, head of multi-asset investments at Rathbone Unit Trust Management, has bought a number of new funds in the last few months as he rejigs his portfolios to focus on global growth.
The manager is particularly bullish on US equities, small and mid-cap stocks across the world and Japanese equities.
To balance these moves, he has been reducing exposure to equity income strategies, expecting growth strategies to outperform as economic recoveries around the world gather pace.
"In a global recovery, markets will start to look for earnings growth and focus less on dividend yields, so mid- and small-caps will outperform," Coombs (pictured) said.
Below, he has named five funds that he has bought, or plans to add to the portfolio, to play these emerging themes.
The MFM Slater Growth fund is managed by Slater CIO and founder Mark Slater and is a concentrated portfolio of 25-40 stocks, most of which are domiciled in the UK.
Over the year it has lagged the IMA UK All Companies sector average with a return of 23.3% versus 26.7%, but has outperformed over three years, returning 44.3% versus 40.5%.
"We have bought the fund for exposure to global alpha, as we have been looking for funds that focus more on alpha than beta and those that move away from big names," Coombs said.
Coombs is increasing his allocation to Japan in the view the region will produce more growth in the near term.
The fund saw a manager change last year, with David Mitchinson replaced by Shoichi Mizusawa, Nicholas Weindling and Naohiro Ozawa.
"We are about to buy J.P. Morgan's fund as we increase our exposure to Japan to marginally overweight," Coombs said. "I met Nicholas Weindling in Japan last year, and once again this year on my trip to Hong Kong and I like their investment style."
The £83m fund has consistently stayed in the top quartile of the IMA Japan sector, returning 46% over three years to 1 November, according to Morningstar, versus a sector average of 32.3%.
Muzinich Total Return Credit (Muzinich Credit Opportunities)
This strategy, run by US-based specialist boutique Muzinich, was recently launched into Europe and the UK. The fund is managed by Mike McEachern, who invests across global investment grade and high yield corporate bonds and bank loans.
Coombs (pictured) said: "We wanted a strategic growth fund to capitalise on the growth theme, so we chose this newly launched strategy."
AXA Framlington UK Mid Cap
Coombs is also looking to add AXA's UK Mid Cap fund to the portfolio, to gain exposure to the smal- and mid-cap stocks that he expects to benefit from the economic recovery.
"Small- and mid-caps have rallied a lot this year at an index level, but there are a lot of names in the small-cap universe, so there are new investment opportunities coming up all the time," he said.
The £52.5m fund was launched in March 2011, is run by Chris St John and has outperformed the IMA UK All Companies sector average over the past year, returning 40.1% versus an average of 26.7%.
Hermes Asia ex Japan Equity fund
Another fund on Coombs' shopping list is the Hermes Asia ex Japan Equity fund, managed by Jonathan Pines, which has been a top performer in the IMA Asia Pacific ex Japan sector over the year, returning 31.6% versus an average of 12%.
"We are looking for alternatives to the Aberdeen and First State funds, which are now pretty full," Coombs said. "We want a more concentrated portfolio that is not constrained by an index, and Hermes' fund fits the bill."
The increase in minimum AE contributions has had little impact on opt-out rates - with cessations after April increasing by less than two percentage points, data from The Pensions Regulator (TPR) shows.
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