On the lookout for hidden value in stocks

FUND FOCUS:General Equity

Best performer YTD: SL Synergy Global Selector +9.1%

Worst performer YTD: Davy Focus International Equity -0.8%

WHILE GLOBAL equity markets remain volatile, there are many funds available to Irish investors that are nonetheless beating the odds and offering decent returns.

According to MoneyMate, so far in the year to October 15th, Irish gross domestic funds invested in general equities have, on average, returned 5.4 per cent, or 9.5 per cent over the previous 12 months.

Best performer in the category is Standard Life’s Synergy Global Selector fund, which has returned 9.1 per cent so far in the year to October 15th, and 15.5 per cent over the previous 12 months.

According to Chris Arnott, head of global investment specialists at Standard Life in Edinburgh, key to the fund’s success is its bottom-up stock-picking focus. It looks for companies for which it has more positive expectations than the market is currently pricing in.

Some of the fund’s current top picks include auction house Sotheby’s, which Arnott says is performing strongly due to demand for high-end goods from the emerging wealthy in countries like China, and online hotel booking operator Priceline.com.

The fund is underweight in sectors like telecoms and financial services, but overweight in consumer discretionary, materials, IT and industrials. Similarly, it is underweight in its allocation to US and Japanese equities, but overweight in Europe/UK, with Arnott identifying this region as being primed for growth.

Arnott says the return on equities is likely to remain under the influence of traders, who are profit-taking at any sign of gains.

“It will be one step forward, two steps back,” he says. Nonetheless, he is fairly optimistic that Standard Life’s stock-picking approach will see it find undiscovered value. “There are lots of good opportunities for a stock-picker,” he says.

At the other end of the scale is Davy’s Focus International Equity fund, which has lost 0.8 per cent so far this year, and has returned almost 1 per cent over the 12 months to October 15th. An actively managed fund, it invests in global equities.