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Five selectors reveal the best little known funds to back

Which funds are finding favour away from the blockbuster bets? Citywire Selector takes a look.

Miniature marvels

While many investors flock to the biggest funds available, there are a number of smaller funds outperforming larger peers which often go overlooked.

These smaller vehicles, normally managed by investment boutiques, can have some advantages over their larger peers, such as being nimble or operating in more niche areas, as well as offering easier investor access when it comes to communication.

In this gallery, Citywire Selector showcases five funds with assets under €200 million which have been recommended by selectors over the past year in the our magazine's Buyers' Market feature.

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US equity

Fund: Stryx America

Size: $48 million (€43.8 million)

The Stryx America fund, which is managed by Raphael Pitoun, invests in high-quality North American firms which have a sustainable competitive advantage, predictable earnings growth and a high return on capital.

The fund consists of just 19 stocks, and, in April 2017, 15 of these rose in absolute terms and the best performer in the fund was painting equipment maker Graco, which rose by a record-breaking 14.6%.

The largest of the other holdings in the fund is financial services company Mastercard, which makes up 7.45%. This is followed by online travel agent Priceline Group, which makes up 6.5% of the fund. Pitoun also holds 8.5% of the fund in cash.

Recommended by: Pierre Bismuth, Myra AM

While many investors are shunning the US, Bismuth said this fund was relatively unknown and could provide opportunities. ‘The diversity of the US economy and its culture of capitalism offer market participants the possibility of investing in a wide range of firms operating in all sectors. Finally, the most innovative companies are based or listed on the US stock exchanges and are one of the keys to sustainable economic growth.’

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Fixed income

Fund: Storm Fund II Storm Bond Fund

Size: 819 million Norwegian Krone (€86.7 million)

Morten E. Astrup and Morten Venold have managed the Storm Fund II Storm Bond fund since its launch in September 2008. The high yield bond fund focuses on the Nordic markets and holds 36 bonds and four equities.

Maturity in the fund is kept low, with 32.66% of holdings have a maturity range of three years or less and duration is 1.5 years. In terms of holdings, the pair devote 8.81% of the fund to bonds of oil exploration and production company Aker BP. The second largest holding is shipping company Stena, which makes up 5.27% of the fund.

Recommended by: Espen Seidel, Finansco

Nordic selector Seidel nominated the fund as one of his top performers in 2016. ‘We had a substantial allocation to Nordic high yield and took a severe beating last winter. In the end, we decided the market was oversold and increased our exposure to this segment. Despite substantial drawdowns in the period, the Storm Bond fund is up 6% over the last 12 months and one of our best-performing investments’

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Asian equity

Fund: Alquity SICAV – Alquity Asia

Size: $96.21 million (€87.8 million)

Managed by Mike Sell since its launch in April 2014, the Alquity SICAV- Alquity Asia fund has 46 holdings in Asian countries. The largest of these holdings is real estate holding company Yoma at 4.2%.

The biggest country allocation is India at 30.7%, with Sell stating that the country had been one of the strongest performers in Asia and demonetisation had not put investors off the country.

The third largest holding in the fund is Bangladesh–based Brac bank. Sell said investors had increasingly discovered this stock and it has risen by 28.9% as a result.

Recommended by: David Agar, AAM Advisory

Agar believes the fund could benefit from growth in the emerging markets space. ‘We like the fund, as it is truly bottom-up and is small enough to make some interesting allocations to markets that would be beyond the reach of larger funds.’

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Absolute return

Fund: Tungsten TRYCON Basic Invest HAIG

Size: €143 million

The Tungsten TRYCON Basic Invest HAIG fund is managed by Michael Gunther and Pablo Hess, who both hold a Citywire + rating.

The absolute return fund holds a combination of 40 long/short positions across a range of asset classes. According to the latest fund factsheet, German equities were one of the main winners for the fund along with Spanish equities.

Recommended by: Florian Gröschl, ARC Absolute Return Consulting

Gröschl said the fund was one of the more interesting ones on offer in the alternatives space. ‘This strategy consists of 20% traditional CTAs, while 80% is made up of probably the most sophisticated machine-learning strategy that is available in the Ucits space. The beauty of the system is that it takes into account dynamics such as non-linear relations, which are highly complex and not normally on traditional managers’ radars.’

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China equity

Fund:ChinaAMC China Growth Fund

Size: $103.5 million (€94.49 million)

The ChinaAMC China Growth fund has been managed by Tian Gan since its launch in April 2011. The fund can hold long and short positions in Chinese equities including A-shares and H-shares.

Financials is the largest sector allocation at 15.96%. The largest company allocation is to China Construction Bank, which is a long position of 8.06%. Gan also likes "old economy"-related sectors, such as construction and materials and he has a 9.31% allocation to industrials.

Recommended by: Domenico Fazio, Agenda Invest

Fazio said EM investors need to be increasingly flexible. ‘This environment is more supportive for managers with a long/short strategy that combines a top-down and bottom-up approach. China, in particular, is the most interesting story to play in that way. The ChinaAMC China Growth fund is a good investment here. It is a long/short strategy that blends fundamental bottom-up analysis with independent macro research.’

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Related Fund Managers

Pablo Hess
Pablo Hess
13/25 in Alternative UCITS - Managed Futures (Performance over 3 years) Average Total Return: 11.82%
Mike Sell
Mike Sell
105/209 in Equity - Asia Pacific Excluding Japan (Performance over 3 years) Average Total Return: 11.90%
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