Is it time to get defensive?
Equities around the world have enjoyed an incredibly strong bounce back since the Covid-19 crash,...
Life at the moment seems to be dictated by one list or another. Staying inside all day means I’ve noticed every little thing that needs doing: the kitchen is constantly collecting mugs during the day; the plants need watering; the dog needs walking and I need to exercise! To top it all off, we’ve decided to move flats in the coming months, so things like ‘call estate agent back’ seem to be a daily occurrence as well. The last thing I need is something else on my list, so I’ve decided to turn my investments over to the professionals – so they’re on their to do list, not mine…
‘Time is what we want most, but what we use worst.’
— William Penn, writer (and colonial founder of Pennsylvania)
If you took our Introduction to Investing course, you’re ready to start researching your own funds. FundCalibre already chooses who we think are the best managers and funds, but if you don’t want to research them yourself, or simply don’t have the time, then multi-asset multi-manager funds can do it for you. This type of fund offers a straightforward solution for many investors who prefer to leave the big decisions to professional fund managers.
Multi-asset funds offer a straightforward solution for many investors who prefer to leave the big decisions to professional fund managers. One of the key attributes is they can invest in a number of different assets and give valuable diversification to your portfolio. Some invest directly in assets, others – multi-manager funds – invest in a selection of funds instead.
The team behind the Jupiter Merlin range uses its expertise to select who it believes to be the best fund managers in each asset class and region, with the aim of producing the best possible returns consistent with the risk profile of each fund. Jupiter Merlin Income currently invests in 17 different funds – 9 of which happen to be Elite Rated*.
As co-manager John Chatfeild-Roberts said: “If you think about life, it’s about people. As with schoolteachers – there are good ones and bad ones. The good ones really inspired you, imparted an enthusiasm for their subject and increased your understanding; in classes with bad ones, you never learned a thing. It’s the same in fund management.”
Close Managed Income also invests primarily in actively managed funds. Its managers have the view that simple passive strategies (index funds) typically ‘own’ the whole market – whether that be poor, average or good companies. In contrast, active managers try to isolate the leaders of the pack.
“They don’t want mediocre. They want to find an edge by ‘out-analysing’ the market and so will focus on elements like balance sheet strength, the ability to survive tougher times, to disrupt competitors or even overthrow the very industries which spawned them,” they said. “Essentially, they are looking for investments that will do well in the future. This is at odds with the index, which by definition is an index of yesterday’s winners.
“‘Average’ is not the pond we are fishing in either – we are always trying to find the very best global fund managers in every sector.”
BMO MM Navigator Distribution is another multi-manager option. Co-manager Gary Potter says: “The key to our process is our team, who have stayed together through three different businesses – some of us have never worked with anyone else! – and the average tenure is longer than the average marriage.”
The fund invests primarily in funds where their managers are experienced, have a proven ability, and are well-known to Gary and his co-manager Rob Burdett. However, this fundamental strategy is supplemented with emerging and new ideas or younger fund managers who are displaying abilities and an investment maturity beyond their years.
Another ‘fund of funds’ is Premier Multi-Asset Monthly Income. David Hambridge, who leads the team behind it, says: “Diversification has been the key to our success; not only do we have numerous eggs, we also have many baskets.”
While any fund selected for the portfolio has the potential to produce superior income and medium to long-term capital growth, for the team, it is equally important that any new fund blends well with other holdings in the portfolio.
Last, but by no means least, VT Seneca Diversified Income is a good example of where a fund combines strategies. The four-strong investment team in charge of the portfolio execute their ideas via a mix of funds and direct securities. Using both alternative and traditional asset classes also enables the team to achieve true diversification.
*Source: Fund factsheet, 30 April 2020