The changes we've made to the Favourite funds list

We keep our Favourite funds list under constant review to ensure we have the highest conviction in the funds we’ve selected. Following a recent review, we’ve added the Schroder Asian Alpha Plus fund and removed the Fidelity Asia and Schroder European funds.  

In Asia, we’ve chosen to add the Schroder Asian Alpha Plus fund because of its strong management team, deep pool of research analysts, and considered investment approach. At the fund’s helm is Richard Sennitt, who has been lead manager since 2021, taking over from long-time manager Matthew Dobbs. Richard started his investment career at Schroders over three decades ago, initially working as an analyst before forming a partnership with Matthew Dobbs that spanned fifteen years until Matthew’s retirement. Richard is joined by co portfolio manager Abbas Barkhordar. The pair work with a large group of on-the-ground analysts who cover the breadth of the Asian equity market and look to identify companies with growing earnings, stable balance sheets and most importantly, strong management teams.  

The portfolio incorporates the best ideas of this analyst team, focusing on companies earning above their cost of capital (the expense incurred to fund operations and investments). Typically, the portfolio is made up of 55–60 stocks, and can substantially differ from the sector and country weightings of the benchmark.  

To make room for the Schroder Asian Alpha Plus fund, we’ve decided to remove the Fidelity Asia fund, owing to our lower confidence in it. Fidelity Asia’s lead manager, Teera Chanpongsang, has shown himself a capable investor, and has a similarly deep pool of analysts. The two funds also have similar investment philosophies. However, we believe investors are better served by the approach of the Schroders team, which typically results in a more balanced portfolio, that is less volatile when their investment style is out of favour.  

In Europe, we’ve removed the Schroder European fund from our Favourite fund list as we’ve grown less confident in the fund’s manager and his investment approach. The aim of manager, Martin Skanberg, is to create a balanced portfolio of growth, value, cyclical and defensive stocks. This he constantly reassesses to make sure the fund is invested in the areas of the market where he sees the best opportunities. Despite this noble aim, the fund’s performance has underwhelmed over the medium to longer term, delivering returns below its index and peers.