Recession-proofing your portfolio
This article first appeared on octomembers.com on 23 September 2022 You know we’re in bother when...
It’s been a difficult start to the year for markets. January saw both growth strategies and bond markets fall with the prospect of rising interest rates and now the invasion of Ukraine has left investors – indeed the world – reeling.
Global stock markets have sold off and the FTSE 100, having held up reasonably well initially, fell almost 7% last week, falling below the 7,000 mark, as the war intensified.
But some investment funds have held up better than others.
Here, we take a look at ten Elite Rated funds and trusts that have managed to stay in positive territory so far this ISA season.
BlackRock World Mining is a specialist trust offering exposure to mining and metals companies globally. In addition to investing in quoted securities, the trust may also invest in royalties derived from the production of metals and minerals, physical metals and unquoted securities. It also offers an attractive dividend yield to investors. Managers Evy Hambro and Olivia Markham spoke to use recently on this podcast:
ASI Latin American Equity fund gives investors exposure to companies throughout Latin America. It is managed by abrdn’s renowned emerging markets team, whose primary investment concern is whether companies demonstrate outstanding quality characteristics, such as strong management and balance sheets. This is followed by a value approach – targeting stocks which appear to trade for less than they should do.
This is a concentrated fund investing in gold mining companies. It has an excellent track record and has been managed by George Cheveley, a highly experienced commodities expert, since 2015. It has a strong process emphasising the importance of high returns on capital and there is an emphasis on sustainability which is built into all company models. Performance is likely to be heavily dependent on the price of gold.
A truly unique fund, Jupiter Gold & Silver invests in both physical gold and silver bullion, as well as gold and silver mining companies. Most funds in its peer group are unable to own physical bullion, making this a very different proposition. Jupiter Gold & Silver’s returns have been volatile since launch, but its low correlation to other asset classes demonstrates its potential value in a diversified portfolio.
An extension of the wider Ruffer Investment Strategy, the LF Ruffer Diversified Return fund is an absolute return vehicle which has the protection of investor capital at the heart of its process. The fund aims not to lose money on any 12-month rolling basis, with a strong emphasis on providing genuine protection in times of market stress. Asset allocation is the key driver of returns in the portfolio.
Well-known Asian income manager Jason Pidcock combs the breadth of the Asia Pacific market in search of large companies with reliable dividends that can deliver both income and growth for investors. Jupiter Asian Income fund aims to capitalise on the opportunities of today, as well as the potential of tomorrow, and is not afraid to hold much more or less of certain countries than its benchmark in pursuit of this aim.
Time:Commercial Long Income aims to provide a secure and stable investment return primarily through acquiring commercial freehold ground rents and commercial freehold property (known as ‘long income property’), which benefit from long leases. The fund targets an income return of 4% per annum and capital growth. Owing to its very low correlation to fixed income and equities, this fund could be an excellent diversifier.
Run by a four-strong team this offering looks for companies that have an edge in their respective business sectors. It can invest in any business around the world, but because the managers are looking for industry leaders, there is a natural bias towards larger-sized companies. The fund is also differentiated by the managers’ systematic approach to portfolio construction, which means that behavioural biases should be removed.
There are few managers with a more intimate knowledge of their market than Nick Martin. His many years of experience working in the risk and casualty insurance markets are fundamental to the success of this fund, which provides access to this specialist and often undervalued sector. Everything around us is insured, regardless of economic boom or bust, which provides this fund with very good defensive characteristics
Schroder Asian Income fund uses the experience and depths of Schroder’s regional presence and research team to find companies that offer attractive yields and growing dividend payments. The fund will invest in the Asia Pacific region, including Australia and New Zealand, but excluding Japan. Manager Richard Sennitt has a flexible mandate and aims to maintain a well-diversified portfolio of income streams to generate a 3.5% to 4% yield.
*Source: FE fundinfo, total returns in sterling, 1 January to 4 March 2022