How to pick funds, Diageo & hotel stocks: Companies and Markets Show

This episode of the Investors' Chronicle's Companies and Markets Show examines three key areas for investors: the hospitality sector amid geopolitical uncertainty, Diageo's struggling but potentially turning-around performance, and a comprehensive guide to selecting mutual funds. Mark Robinson analyzes quarterly results from Intercontinental Hotels Group (IHG) and Whitbread, noting strong revenue per room growth and occupancy rates despite Middle East tensions, though Whitbread faces challenges in Germany and is restructuring with job cuts and property sales. Both companies appear to have priced in much of the current uncertainty, with IHG maintaining buybacks and Whitbread focusing on Premier Inn's core strength. Diageo, after a difficult period marked by declining demand among younger demographics and inventory issues, shows signs of recovery with a return to organic growth and improved Latin American restocking, setting the stage for a major strategic announcement by new CEO Dave Lewis in August. The episode concludes with Val Cipriani offering a practical checklist for fund selection, warning against chasing short-term performance and emphasizing the importance of diversifying investment styles, understanding benchmarks, active share, and share class types. She stresses the need for disciplined, portfolio-first thinking over emotional attachment to fund managers. Key takeaways include: avoid investing in funds solely based on recent short-term performance; ensure your fund portfolio includes a mix of investment styles (value, growth, etc.); always compare fund performance against its benchmark; prioritize funds with active share above 80% if seeking active management; choose the right share class (accumulation vs. distribution) based on tax and income needs; and remain skeptical of fund managers' narratives, treating them as one input among many in your research. The overall sentiment is cautiously optimistic, particularly around Diageo's potential turnaround and the actionable guidance on fund selection, with a balanced, informative tone throughout.