A few weeks ago I was casting around the fund’s market looking for bargains, especially in the uncorrelated end of the spectrum. Top of the list mid-March was music royalties fund Hipgnosis Songs Fund.

I have a soft spot for this fund. It’s a genuinely alternative fund which has a clear strategy and a loyal following. I’ve always had my doubts about whether the high quality of the songs being purchased represent best value in the royalty space, but on balance I’ve thought this a useful diversifier fund, especially in the age of streaming music (there are 340 m paying music streaming subscribers).

So, when the fund’s share price crashed to 85p a share – a hefty discount to NAV – versus the previous trading range of 105p to 110p (a premium) I got interested again.

But the recent reversal in sentiment has had an amazing impact on the funds share price. As I write today, the fund is back trading at 103p. I can’t help but think we are back into expensive territory again.

On the positive side I understand why this fund is popular. As I said earlier it is a genuine diversifier. Its also worth noting that the fund recently entered the FTSE250 Index on 20th March 2020 and benefited from 15.5m trading volume that day from index buyers. It’s also worth noting that only 3% of its underlying revenue is derived from live performances and therefore the virus should have little impact on its earnings.

But on the debit side its also worth noting that we are now in a recession where an expensive music streaming package might be regarded as a luxury. There’s also a great many fewer people listening to music on the commute. And Matt Hose, funds analyst at Jefferies, says that Music Business Worldwide is reporting “that global streams of Spotify’s Top 200 tracks – a proxy for wider streaming – increased 3% week-on-week to 26/03/20. However, this was still the third lowest stream-count of 2020 so far. When stripping out the streams of The Weeknd’s newly released album, the week-on-week stream-count would have fallen by 9.1%. On a more positive note, streaming platform Deezer has stated that patterns in their data usage show that individuals need around ten days to adapt to self-isolation measures, meaning the stream-count may recover as time passes”. It’s also worth noting that the Spotify share price hasn’t rallied as strongly as other tech giants in the USD equity rally.

Next up is specialist Berlin residential play, Phoenix Spree Deutschland which is currently trading at 282p which is roughly where it was at after the news broke about the Berlin government introducing a rent freeze.

Again, there are reasons to be cheerful here, not least that Germany seems to be making better job of the virus. Also the fund recently released finals which showed an EPRA NAV at €4.92 per share at 31 December 2019, in the middle of the range of €4.90 – €4.96 to which the company had previously guided. Overall, the fund had total returns of 4.5% in Euro terms for H2 2018 and 9.1% over 2019 as a whole. The portfolio valuation rose 7.1% on a like-for-like basis during 2019, driven by rental growth of 5.6% and active management of the portfolio.

Again, I like this fund especially as it seems to be trading at something like a 60% discount to NAV. And to be fair, the fund is doing the damned good job in a difficult policy environment – especially around flat sales. But much of its upside is based around rental growth which clearly will be an ask moving forward and yield compression, which might fall away if institutional interest wanes. Again, I think this has rallied too aggressively. I’d be a happy buyer at 250p.

Useful table on which EM nations to buy into?

Singapore-based asset management firm Milltrust International runs a very successful global emerging markets fund of fund which allocates between best of breed managers in a variety of local markets. By some measures, its one of the best EM funds out there and it certainly has real expertise in asset allocating to nation level emerging markets.

Thus, its absolutely worth listening to them when they walk their investors through their preferred nations at the moment.

On balance I am still deeply bearish about Emerging Markets because of the virus and its follow on impacts. I think we are only just at the beginning of a nasty journey for many states. That said many investors, even big names such as GMO, have been arguing that EM assets were cheap BEFORE the crisis. Since then they’ve become even cheaper! I see the arguments but remain to be convinced although I have more sympathy for a specific Asian EM strategy excluding South Asia.

Milltrust International, as you’d expect, begs to differ.

Here’s their view:
In absolute terms, we are currently in an environment where nearly every country in this specific investment universe (11 major nations) has had a downgrade over the last 6 months in their GDP growth forecasts for 2020, where nearly every country’s forecasted price-to earnings ratio is trading below their 10 year average, where nearly every country’s year-on-year price momentum is negative, and where nearly every country’s short term interest rates have declined relative to their 24-month average”.

If you buy their analysis, here’s their invaluable score card:

MillTrust are overweight Russia, South Korea, Taiwan, Brazil. I’d agree with the first three of these, not so sure about Brazil. Tie to buy into JPMorgan’s Russian IT . ticker JRS? At 574p a share, its well down from recent highs of close to 800p. Current discount is 10.37%.