Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
What is the AJ Bell Favourite funds list?
The AJ Bell Favourite funds list is designed to lighten your research load. There are thousands of funds out there – so we’ve narrowed the field by selecting a high-quality shortlist of funds we believe can deliver their objectives over the long term. To make the list, each fund needs to pass our robust, independent selection process.
What have we changed?
We keep our Favourite funds list under constant review to ensure we have the highest conviction in the funds on the list. That includes researching the market for new funds which we believe have better potential to achieve their objectives.
As a result of this work, we’ve recently added the Schroder Global Equity Income fund to bring greater choice to investors.
Why have we added this fund?
The Schroder Global Equity Income fund is a global equity fund that looks to provide income and capital growth in excess of the MSCI World Index over a three- to five-year period.
The fund is managed by Nick Kirrage, Simon Adler and Liam Nunn. Kirrage has spent over 20 years at Schroders, and is also co-head of their global value team.
The fund sets out to identify companies that are fundamentally strong but out of favour. The three fund managers are prepared to take a long-term approach, waiting for the companies to recover and come back into favour. This approach is a form of what is known as ‘value’ investing.
The investment process uses quantitative screens to identify companies with a solid underlying financial position. They then undertake qualitative research to understand why the company is unloved and whether it has potential for recovery. As a result of this approach, the team are naturally contrarian. They also have a long-term investment horizon, as patience is required when waiting for the wider market to recognise the companies’ recovery potential. Consequently, this fund is very unlikely to hold companies currently in fashion with investors.
As this is an income fund, the managers look for companies with strong balance sheets. This suggests that they should be able to pay dividends over the long term. The resulting portfolio is benchmark agnostic and high conviction, typically comprising 30–50 individual stocks positions. Overall, this means the fund will look very different to the index, and perform very differently as a result.
Because this fund operates in such a different manner to the other global equity income funds on the Favourite funds list, we think it brings a greater choice of management approach for investors.