AJ Bell Global Growth fund – 3 Year Anniversary

‘Buying the portfolio of the future, today’. That’s how we described an investment in the Global Growth fund, back when we launched it in June 2018. The fund focuses on future-facing sectors such as technology – including cutting-edge companies in areas such as artificial intelligence and robotics – as well as alternative energy and emerging markets.

To mark the Global Growth fund’s third birthday, we wanted to take the opportunity to review its performance. We’ll also look at how it is positioned to take advantage of investment themes that we feel will power future world economic development.

Performance

Source: Morningstar & AJ Bell calculations; return shown net of fees

To help you compare the fund’s performance, we use the Investment Association (‘IA’) Flexible Investment sector benchmark, which is a group of funds with similar risk-return objectives and characteristics. The chart above shows the performance of the Global Growth fund versus this benchmark. It tells a story of a tumultuous three years of dramatic economic and political events – including Brexit uncertainty, the US elections and the financial fallout from the coronavirus crisis.

Against this background, we are pleased with the performance of the Global Growth fund – particularly its outperformance versus peers. The fund returned 27.44% over the 3-year period from 11 June 2018, versus the IA Flexible Investment sector average of 21.31%. This return puts the fund in the first quartile (top 25%) of its IA sector.

In ‘pounds and pence’ terms, a £20,000 ISA subscription in the AJ Bell Global Growth fund back in June 2018 would now be worth £25,488. That’s over £1,000 more than the equivalent return from the IA sector average, of £24,261. Over the same period, using the Bank of England’s base rate as an indication of the cash return you might have received, a £20,000 deposit would now be worth approximately £20,272.

Controlling costs

As a key contributor to long-term investment return, we know the importance of controlling costs. The Global Growth fund has steadily increased in size over its first three years, letting us pass on the benefits of economies of scale to investors. We’ve reduced the fund’s capped ongoing charge figure (‘OCF’) from 0.50% in 2018 to 0.33% now. This, measured against the IA Flexible Investment sector average of 1.15, is extremely competitive, as you can see:

Source: Morningstar & AJ Bell calculations

Future trends

In February 2021, the AJ Bell Investments team updated the asset allocation of its fund range. This was to ensure that the Global Growth fund maintains its position as a well-diversified, global multi-asset portfolio, built to capitalise on the trends we think will drive future growth.

These trends include:

• Technology. The coronavirus pandemic dramatically accelerated the use of tech by individuals, governments and companies. With more demand for remote working, pioneering innovation, advanced manufacturing, and productivity tools on the horizon, we maintained an allocation to technology shares.
• China and India. The Global Growth fund has allocations to both these countries. Already making up a substantial chunk of the world economy, the two countries continue to grow quickly and have become engines of the world economic recovery.
• ‘Building back better’. This is a key theme for governments, and the fund’s allocation to infrastructure shares allows it to benefit from large-scale projects – particularly in high-tech and renewable sectors such as solar and wind farms. This position, along with an allocation to energy companies, also provides built-in protection against potential rises in inflation.

We’re delighted with the first three years of the Global Growth fund, and we feel confident that the portfolio is positioned to take advantage of growth opportunities over the next three years and beyond.

Thanks for reading and, to all of our investors, thank you for your ongoing support.

If you’d like any more information about the Global Growth fund, or the rest of the AJ Bell Investments range, please visit our investment ideas page.

The value of your investments can go down as well as up and you may get back less than you originally invested. These articles are for information purposes only and are not a personal recommendation or advice. Past performance is not a guide to future performance and some investment need to be held for the long term. Forecasts are not a reliable indicator of future performance.