Six investment funds ‘staying alert’
With the ‘rule of six’ set to be in place for a possible six months in an effort to control a second...
Last week, when I wrote about five investment myths amongst millennials, number four: “I don’t have the time”, really stuck with me.
I get it. Life sometimes has a way of catching up on you and it can feel like you’re fitting nine days of stuff into seven and the last thing you want to think about is adding something else to your ‘to do’ list.
But what if you didn’t have to check in on your investments daily, weekly or even monthly? It’s a good idea to check in on your finances regularly, but if you’re planning on taking a ‘buy and hold’ approach, you can probably get away with once or twice a year. If this is the case, you could opt for a multi-asset fund.
‘There is nothing more precious than time.’ – Czech Proverb
As the name implies, this type of fund invests in more than one asset class – equities, bonds, commodities, property, specialist areas — a variety. The fund manager then alters the amount invested in each asset class, depending on market conditions — meaning you don’t have to worry about what the Coronavirus is doing to global stock markets, if the UK is slipping into recession, or what Trump’s latest tweet is doing to trade war tensions.
As illustrated last week, the average full-time salary in the UK is £36,611*. Assuming you’re setting aside 5% each year, or £152.55 a month, for five years in TB Wise Multi-Asset Growth fund would have returned £11,658.86** — gains of £2,505.86.
|Fund||IA sector||Total returns in sterling*|
|TB Wise Multi-Asset Growth||IA Flexible Investment||£11,658.86|
|Premier Diversified Growth||IA Mixed Investment 40-86% Shares||£11,584.85|
|Jupiter Merlin Growth Portfolio||IA Flexible Investment||£11,322.41|
|Kames Diversified Monthly Income||IA Mixed Investment 20-60% Shares||£11,143.67|
|Jupiter Merlin Balanced Portfolio||IA Mixed Investment 40-86% Shares||£11,014.74|
|M&G Episode Income||IA Mixed Investment 20-60% Shares||£10,869.74|
|Rathbone Strategic Growth Portfolio||IA Volatility Managed||£10,805.78|
|Premier Multi-Asset Growth & Income||IA Mixed Investment 40-86% Shares||£10,737.82|
|VT Seneca Diversified Income||IA Mixed Investment 20-60% Shares||£10,704.10|
|Artemis Monthly Distribution||IA Mixed Investment 20-60% Shares||£10,626.18|
No matter your tolerance for risk, there’s a multi-asset fund out there for you. Funds that sit in the Mixed Investment 0-35% Shares sector are generally considered the lowest risk within multi-asset sectors because, as the name suggests, at a maximum they can only invest 35% in equities.
The number of different assets the funds invest in can vary from fund to fund, so when doing your research it is important to read the information about each one carefully. For example, in the Mixed Investment 20-60% Shares sector, Elite Rated Artemis Monthly Distribution fund invests solely in a combination of equities and bonds. Elite Rated VT Seneca Diversified Income however, invests in other funds: this is sometimes referred to as a ‘fund of funds’.
If you want more risk, you may want to consider those funds that can invest 40% to 85% in equities, such as Elite Rated Premier Diversified Growth. Manager Neil Birrell invests directly in companies, as well as other funds. Looking for flexibility in your investments? TB Wise Multi-Asset Growth sits in the flexible sector meaning it can invest in several different types of asset classes without the formal equity constraints previously mentioned.
The final type of multi-asset fund you may come across are those in the ‘Volatility Managed sector’. Similar to the flexible sector, these funds can invest in several different asset classes without equity constraints. However, their goal is to manage returns within specified volatility parameters. One such example is Rathbone Strategic Growth Portfolio, which aims to hold around two-thirds of the portfolio in equities.
*Source: Average Salary UK 2019, findcourses.co.uk
**Source: FE Analytics, total returns in sterling, 1 February 2015 to 31 January 2020