5 Funds Due a Bounce

THE VALUE INVESTOR: Looking for investment ideas? These five funds are rated highly by analysts, but have recently underperformed their benchmark

Emma Wall 3 April, 2014 | 3:24PM
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Successful investors are adept at buying good quality stocks, bond and funds on the cheap, and then profiting when those holdings realise their true value.

While not all investors have the analytical skills required to sort the true undervalued asset from ‘value traps’ it is easy to use professional research to your advantage.

Morningstar analysts identify those funds they expect to deliver positive real returns in the future and award them a Gold, Silver or Bronze rating.

This qualitative research is run alongside the Morningstar star rating which is quantitative research. Funds are awarded a one to five star rating dependent on the past three years performance. One star indicates a fund has significantly underperformed its peers and benchmark. Five stars indicates a fund has significantly outperformed its peer group and benchmark.

Therefore, a fund with rated Gold, Silver or Bronze, which also carries a low star rating, could be an undervalued asset due a uptick in performance. Using the Morningstar Fund Screener, we highlight five of these potential bouncers below.

Artemis UK Smaller Companies

Analyst Rating: Gold
Morningstar Rating: Two stars

The fund focuses on high-quality companies that demonstrate resilient business models. The investment approach is implemented through thorough bottom-up stock analysis based upon growth, value, estimate revision, and momentum.

M&G Recovery

Analyst Rating: Gold
Morningstar Rating: Two stars

The fund invests in companies that are in recovery situations and, in particular, companies that have undergone management changes or have underperformed the market. 

Axa Framlington Equity Income

Analyst Rating: Silver
Morningstar Rating: Two stars

This fund is characterised by its exposure lower down the market-cap ladder, which also entails higher volatility relative to its peers, but is a good choice for those who can handle its risks.

Carmignac Patrimoine

Analyst Rating: Silver
Morningstar Rating: One star

The investment policy takes into account the principle of risk spreading by means of the diversification of investments. The allocation of the portfolio between the different asset classes based on fundamental analysis of the global macroeconomic environment.

Neptune Global Equity

Analyst Rating: Silver
Morningstar Rating: Two stars

The investment approach is based on Neptune’s philosophy, which aims to form positive views on asset classes, sectors and stocks and then back those judgments strongly.



The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Artemis UK Smaller Companies R Acc19.78 GBP0.49Rating
Liontrust Global Equity A Acc GBP6.23 GBP-1.56Rating
M&G Recovery GBP A Acc318.71 GBP1.56Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar