Bill McQuaker's 3 Fund Picks

Fidelity veteran multi-asset fund manager Bill McQuaker highlights three of his favourite funds

Emma Wall 27 November, 2017 | 3:36PM
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Emma Wall: Hello, and welcome to Morningstar. I'm Emma Wall and I'm joined today by Bill McQuaker, Fidelity Multi Asset Manager, to give me his three fund picks.

Hi, Bill.

Bill McQuaker: Hi, Emma.

Wall: So, what's your first fund pick today?

McQuaker: The first fund I'm going for is the Morant Wright Japan Fuji Fund. It is a value-orientated fund, very much in line with the Morant Wright house style, something with a small-cap bias, and it also has a yield bias. And I think that's quite an interesting approach for the Japanese equity market at the moment.

One of the great strengths of Japanese companies is that they have got fabulous balance sheets. And the Morant Wright approach to investing is about leaning quite heavily on that balance sheet and the safety that it brings. And so, the Fuji Fund is full of small companies that have got strong balance sheets, that generate cash and I think returns over the next few years will be very acceptable to investors as those balance sheets are either returned in the form of dividends or perhaps in the form of share buybacks and as everyone shares in the kind of built up benefit of the underpinning – the underlying strong balance sheets.

Wall: And what's the second fund today?

McQuaker: The second fund is Investec Gold. It's something of a safety-first fund in as much as when the world is clement, and things are going well, I wouldn't expect gold equity to perform particularly brightly. However, when things take a turn for the worst, as it did for example in the first half of 2016, that's when gold equities can really come to life. So, there's some of a portfolio hedging characteristic that I think has got a role in any investor's portfolio. And the strategy is well-managed and if gold and gold equities do well, it will be something of a levered play on that I think.

Wall: Can I ask a question about that fund? So, I think, some people get confused between holding physical gold and gold equities. Do you have a preference with that?

McQuaker: I don't have a preference in fact. I observe that they both travel in the same direction at the same time. But gold equity tends to be a bit more violent, both when things are going well and when things are going badly. So, for people who like the idea of the safety of gold, but don't feel comfortable with slightly more extreme moves, they should go for physical gold. Where they are happy to enjoy the good times because it will be very good, but they can stomach some short sharp losses, then I think gold equity is more interesting.

Wall: Thank you. And what's the third and final fund pick?

McQuaker: The third fund pick is the Invesco Perpetual Continental European Fund. It's quite a conventional European value-orientated fund with something of a macro overlay to it. And when I look at the shape of the portfolio today, there's quite a lot of exposure to European banks.

There's quite a lot of exposure to the European oil sector. And if as I think is likely the first half of next year is characterized by ongoing global growth and ongoing European growth, then I think that that probably sees some normalization in interest rates and that would be good for banks and I think the oil sector has been slow to appreciate how much better things look in terms of global growth. So, I think there's some catchup from that part of the portfolio as well.

Wall: Bill, thank you very much.

McQuaker: Pleasure.

Wall: This is Emma Wall for Morningstar. Thank you for watching.

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
Fidelity MltAsst Open Str W Acc163.10 GBP0.18Rating
Invesco European Equity UK (NoTrail) Acc285.04 GBP0.14Rating
LF Morant Wright Japan B Acc641.33 GBP0.94Rating
Ninety One Global Gold R £ Acc141.85 GBP1.50Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar

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