World Cup winning investments

It’s just a few weeks until the FIFA World Cup kicks off in Qatar – and fans are already debating which team will emerge victorious.

The prestigious month-long tournament sees the 32 qualifying nations compete against each other to win the top prize in the sport’s men’s game.

To celebrate this event, which starts in late November, we take a look at investment funds covering different regions that could be in the running.

Tournament legends: Brazil

Players wearing the famous yellow and blue strip of Brazil have been crowned world champions a record five times. Although the last time they lifted the trophy was back in 2002, they are going into this tournament as one of the favourites.

The abrdn Latin American Equity fund has 62.5% of its assets in the country, with Mexico the next most significant allocation at 27.4%*. Brazilian companies account for many of the fund’s largest positions and include financial services firm Banco Bradesco SA, mining conglomerate Vale SA, and energy giant Petrobras*. The fund is managed by abrdn’s experienced emerging markets team, whose primary concern is examining company characteristics such as the strength of management.

Defending champions: France

A European nation has won each of the last four World Cups. Italy took the crown in 2006, Spain four years later and Germany in 2014. The defending champions, meanwhile, are France.

The BlackRock European Dynamic fund, which is managed by Giles Rothbarth, invests in companies of all sizes across the continent. It also has broad country exposure. French companies currently account for 28.9% of assets under management, followed by 15.9% in Switzerland*. Denmark and Germany each have a 12% share*.

Giles became co-manager of this fund in 2019, and lead manager at the beginning of 2021. He adopts a flexible approach to fund management, favouring companies that are either undervalued and/or have good growth potential across different time horizons.

Home nations: England and Wales

England have only won the title once – on home soil in 1966 – but hopes are high this time around with the team having made the semi-finals in 2018 and the European final last year.  The men’s team may now also feel the pressure as the women’s team were recently crowned Champions of Europe!

The other home nation qualifier, Wales, is making only its second appearance in the tournament finals. Its first came way back in 1958 and ended in the quarter finals.

The Rathbone UK Opportunities fund is managed by Alexandra Jackson, an exciting up and coming manager. She scours the market for a small number of UK-listed stocks and prefers businesses that are growing rapidly but whose value is unrecognised by the market. The top 10 holdings in the fund currently include drinks company Diageo, which boasts brands such as Johnnie Walker Scotch whisky, Guinness, and Tanqueray gin*.

Alexandra appeared on a recent episode of the insightful ‘Investing on the Go’ podcast series.

Yet to win: Japan

Japan will be appearing in their seventh world cup finals this year. The team has qualified for every tournament since 1998 but is yet to taste victory.

The Comgest Growth Japan fund, which is a concentrated portfolio of around 30 to 40 high quality growth companies, is run by Chantana Ward, Richard Kaye, Makoto Egami and Junzaburo Hyuga. The four-strong team employs an unconstrained approach and has demonstrated good active management in a region that has been traditionally challenging for managers.

Currently, the fund’s largest position of 4% is in FANUC, a Japanese group of companies that provide automation products and services, including robotics*. KOSÉ Corporation, a multinational personal care company, is next with 3.9%, followed by Daikin Industries, which provides air conditioning solutions*.

Can the men match the women? USA

The USA men’s team is another that’s never been crowned champions. Their best place came way back in 1930 at the inaugural tournament in Uruguay. In contrast, the USA is the only country to have reached semi finals of every FIFA Women’s World Cup and has won a record four World Cup titles.

The T. Rowe Price US Large Cap Growth Equity fund, which is managed by Taymour Tamaddon, invests in large US firms demonstrating innovation and change. Its 10 largest holdings including multinational giants such as Microsoft, Apple, Amazon.com, and Alphabet, the parent company of search engine Google*.

Taymour prefers to have a diversified portfolio of shares that have the potential for above average and sustainable rates of earnings growth. He also benefits from being able to tap into the vast analyst resource at T. Rowe Price, which is one of the world’s largest investment managers.

Other contenders

Elsewhere, there is the Aubrey Global Emerging Markets fund, whose country allocations include 4.3% in Mexico and 2.8% in Poland, another of this year’s world cup qualifiers*. The fund, whose lead manager is Aubrey founder Andrew Dalrymple, invests at least 95% of its assets in emerging market companies.

Then there is Anthony Srom’s Fidelity Asia Pacific Opportunities fund. Its positions include 14.7% in Australia*. For example, the fund has a 4.9% weighting in CSL Ltd, an Australian biotechnology company that’s focused on rare and serious illnesses, influenza vaccines, and iron deficiency and nephrology*.

Global approach

Of course, you may prefer to hedge your bets and opt for a fund that has broader exposure to a number of the world cup qualifiers. The good news is you’d be spoilt for choice.

Possible contenders include the CT Global Focus fund that’s been managed by David Dudding since April 2018. This is a concentrated, high conviction portfolio of best ideas, with the focus being on high quality, high return on capital businesses that can compound over the long term.

From a geographical standpoint, its highest weighting is the 60.6% on the United States*. However, it also has exposure to a vast array of countries that we’ll see competing in Qatar.

They include France, Switzerland, Japan, Denmark, Germany, United Kingdom, and Canada*.

*Source: fund factsheet, 30 September 2022

_{Photo by Fauzan Saari on Unsplash}