Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
We’ve removed TM Crux European Special Situations.
What is the AJ Bell Favourite funds list?
The AJ Bell Favourite funds list is designed to lighten your research load. To narrow the field, we’ve attempted to select a high-quality shortlist of funds capable of delivering their objectives over the long term. To make the list, each fund needs to pass a robust independent selection process.
In our view, it’s important for the AJ Bell Favourite funds list to be diverse – spanning various sectors and investment styles – to give you plenty of choice. A consequence of this diversity is that it isn’t possible for every fund on the list to perform well at any one time. This is because market conditions which act as tailwinds for some types of funds may be headwinds for others, and vice versa.
What have we changed?
We’ve removed the TM Crux European Special Situations fund. The fund has been part of the Favourite Funds list since inception, and the decision to remove it hasn’t been taken lightly.
The fund manager builds the portfolio through a bottom-up research process, seeking to identify stocks with high quality, strong management teams, well capitalised businesses, and low valuations. The stocks they select usually feature across the market cap spectrum.
When we remove a fund from the Favourite funds list, it means our opinion has changed and ultimately, we have lost conviction that the fund can deliver its stated objective over the long term. And lately we’ve identified three areas of concern for this fund that have changed our conviction level.
Firstly, the fund has invested in a couple of US listed stocks, namely Alphabet and Alibaba ADR. These positions are off-benchmark, and while the manager has clear rationale for holding them, we feel that they add an extra layer of complexity and risk that is unusual for this type of fund.
Secondly, the recent performance profile of the fund has been poor and outside of expectations – especially as growth stocks form part of the fund manager’s natural hunting ground, and this sector has continued to perform well. Of course, the fund’s focus on valuation has held it back from owning some of the highest-growth names, but nonetheless we would have expected better risk-adjusted returns this year so far.
Thirdly, the size of the fund has fallen substantially in the last two years, which can create a challenging environment to operate in.
Taken together, these three concerns have contributed to our decision to remove the fund from the list.
We hope you find this update useful. Please remember that it falls to you to monitor and manage your own investments and to make any changes you think are necessary. Keep in mind this is information only, and not a personal recommendation to buy or sell any of the funds referenced above.