Top Picks – January 2023 – Funds Selection

We are showing here a selection of funds that might be of interest to you, either due to their recent outstanding performance, the attractive return potential or diversification benfit they may offer in the given market conditions.

The year 2022 has finally come to an end, and it will be remembered as one of the tougher market environments since at least the last global financial crisis in 2008. It was a combination of events for a perfect storm starting with war in Ukraine, geopolitical tensions, the energy crisis, recession fears coupled with falling consumer confidence, to name a few.

But the more impactful for asset allocators was probably the cycle of unprecedent rates hikes and financial conditions tightening across the globe, particularly in the US, to bring rising inflation under control in developed countries. The consequence for bond investors was the worst drawdown experienced ever in a 12-month calendar period.

In this context, active Portfolio Managers were not immune, underperforming the mainstream benchmarks for both equities and fixed income. A year for history in terms of negative alpha generation.

December 2022

In down markets such as again in last December, actively managed funds still achieved to outperform across many asset classes and regions.

In Equity funds, the Invesco Global Consumer Trends (+370bps), the Federated Hermes Impact Opportunities (+330bps), the  M&G Global Listed Infrastructure (+270bps), and the Goldman Sachs Global Millennials (+250bps), as well in  Fixed Income funds, the Pimco GIS Capital Securities (+60bps) and the Vontobel TwentyFour Strategic Income (+30bps) exhibited among the best alpha creation for the period.

Top Picks 2022

More globally, in 2022, only a handful of strategies managed to outperform their benchmarks.

Equity funds were a dreadful area for alpha generation. Value stocks have significantly outperformed growth stocks, while energy was the only sector in USD terms to end the year in positive territory in a very wide dispersion of industry returns. In this adverse scenario for equity managers that underweight those 2 winning exposures, the M&G Global Listed Infrastructure (-6.8% vs. -15.5% for the MSCI ACWI Index NR) exhibited as expected defensive characteristics. The Artemis SmartGARP Global Emerging Markets (-12.8% vs. -16.4% for the MSCI EM Index NR in USD) also delivered pleasing relative performance, benefitting from its substantial value bias and a focus on overlooked stocks.

Within the Fixed Income asset class, widening spreads and duration in a rising interest rates were the two main headwinds for both credit and govies. However, the Robeco Corporate Hybrids(+70bps) outperformed in this tough down bond market.

Among Multi-Asset, an asset class that experienced an unprecedent drawdown, to notice that the NinetyOne GSF Global Multi-Asset Income Fund displayed a very solid downside protection (-3.4% vs. -13.5% for a 60/40 benchmark in USD), in line with its historical conservative features.

Performance figures in basis points (bps) are alpha for the period compared to the respective funds’ benchmark.

All the mentioned funds are exclusively extracted from our OpenList service, a fund selection list for use by Wealth Managers in Switzerland.

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