Nine winning bond and mixed asset funds and trusts
7th January 2016 12:10
by Helen Pridham from interactive investor
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A panel of collective investment experts offer up a bevy of fixed-income and multi-asset investment trusts and funds they think investors should keep in mind.
Bond funds
TwentyFour Dynamic Bond
Income - 1 yr +3.4%; 3 yrs +20.8%; yield 3.7%
was particularly popular among our tipsters. It was the top choice of three of them, but Robert Burdett got his vote in first. A key attraction is that the manager, TwentyFour, specialises in bonds and has the resources to match. Burdett particularly likes the flexibility of this fund: "It is more important than ever as interest rate cycles change and global monetary policy diverges."
L&G Global Inflation Linked Bond Index
Inflation-linked returns - 1 yr -0.5%; 3 yrs n/a; yield 0.3%
As well as TwentyFour Dynamic Bond, Mick Gilligan also tips Legal & General's
fund, which tracks the returns on the Barclays World Government Ex UK Inflation Linked Bonds GBP Hedged index. Inflation can erode the value of fixed income holdings, but this fund offers returns protected against this risk and also hedges against currency movements.Royal London Sterling Extra Yield
Immediate income - 1 yr +1.5%; 3 yrs +25.4; yield 5.9%
Funds targeting high-yielding bonds - such as
- are attractive to investors who want an immediate income. Tony Yarrow points out another advantage of this end of the bond market: "It's the end which would be least affected by a small rise in interest rates." There is a perceived risk of more defaults, but manager Eric Holt knows how to avoid risk.Mixed asset
Aviva Investors Multi-Strategy Target Return
Growth - 1 yr n/a; yield 0%
Targeted absolute return funds are popular among investors looking for steady, low-risk returns. They invest in a range of assets globally and use derivatives to protect against market falls. Mick Gilligan believes
, which aims to deliver average annual returns of 5% above Bank of England base rate, can deliver; its performance was resilient in last summer's market turmoil.F&C Multi Manager Navigator Boutiques
Growth - 1 yr +5%; 3 yrs +43.1%; yield 0%
Robert Burdett has opted for one of his own multi-manager funds for this category. It invests primarily in global equity funds, but can also hold cash. Burdett says the
fund - which is spread around 25 niche specialist investment managers, many inaccessible to private investors - has the advantage of flexibility. "Next year we think flexibility will be key," he adds.Fidelity Moneybuilder Balanced
Income and growth - 1 yr +5.7%; 3 yrs +28.7%; yield 3.5%
The key attributes of successful mixed-asset fund managers, according to John Husselbee, are longevity and experience, consistency and persistence. He believes
will give investors this mix. The fund has an equity income component (around 65%) and a sterling bond component (around 35%) managed by two highly respected managers, Michael Clark and Ian Spreadbury, respectively.Artemis Monthly Distribution
Income and growth - 1 yr +7.5%; 3 yrs +39%; yield 3.9%
As the name implies,
pays a monthly income, generated from a portfolio of corporate bonds and global equities. Gavin Haynes says: "It has produced strong returns since launch, which is no surprise as it is managed by two highly regarded managers. Jacob de Tusch-Lec runs the equities, while the bond component is managed by James Foster."BACIT
Core growth - SP 1 yr +8.9%; 3 yrs +28%; yield 1.6%
Peter Hewitt likes
because it offers exposure to a variety of leading long-only and alternative investment funds across multiple asset classes. All have agreed to waive their management and performance fees, enhancing their returns. Hewitt expects the trust's long-term progress to be reassuringly steady, making it a good "sleep well at night" option.RIT Capital Partners Trust
Core growth - SP 1 yr +12.9%; 3 yrs +45.2; yield 1.9%
was established to manage some of the wealth of the Rothschild family, and its ethos is to both preserve wealth and grow capital. Jean Matterson says: "There is great flexibility in the asset allocation: it can invest in quoted and unquoted equities, third-party and absolute return funds and property, and the managers also pay heed to currency management. We believe the current team of managers, allied to Lord Rothschild's influence, can continue to produce good long term returns."
The Panel:
Robert Burdett began managing funds at Rothschild and then Credit Suisse. In 2007 he joined Thames River to help set up its multi manager business, later taken over by F&C.
Mick Gilligan is a partner in private client stockbroker Killik & Co., where he is currently head of research. He analyses funds and trusts and manages the firm's multi-manager portfolio service.
Tony Yarrow set up his own firm, Wise Investment, in 1992; he is now chairman of the firm and manages portfolios for clients as well as two in-house investment funds.
John Husselbee is head of the Liontrust multi-asset team. He has 25 years of experience in managing multi-manager portfolios, including at Henderson and Rothschild.
Gavin Haynes is managing director of Whitechurch Securities, which provides discretionary portfolio management to private clients. He has been managing fund portfolios since 1997.
Peter Hewitt has managed F&C Managed Portfolio trust since April 2008, having managed its forerunner, F&C Managed Portfolio Service since 2002. He is a member of F&C's Global Equities team.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.