Archived article

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.

A good selection of ideas for cautious, balanced and adventurous investors

Ryan Hughes, head of investment research at AJ Bell, picks eight funds and investment trusts with different risk levels covering bonds, global equities, infrastructure, healthcare and dividends.

Cautious investors: 

Personal Assets Investment Trust (PNL)

5-year annualised return: 6.68% (source: Morningstar)

I’m sticking with the Personal Assets trust for the third year in a row, particularly as the economic scenario that experienced manager Sebastian Lyon at Troy has been worrying about seems to be coming to fruition.

With jittery equity markets and fears over inflation remaining elevated for a considerable period, the defensive positioning of this trust, and in particular its exposure to inflation protecting assets such as gold and inflation-linked bonds should sit well for the year ahead.

The portfolio is relatively unchanged from a year ago with 11% in gold and 31% in index-linked bonds supporting the core exposure to high quality equities.

As a result, the trust works well in providing investors with an instantly diversified portfolio and given the emphasis on capital protection should sit comfortably with cautious investors.

Fidelity Short Dated Corporate Bond Fund (BDCG0F1)

5-year annualised return: 2.18% (source: Morningstar)

With high inflation and interest rates expected to increase, it could be a challenging time for fixed interest, but many investors will still want to hold bonds as part of a diversified portfolio.

Keeping duration short should help dampen volatility and protect against capital losses and therefore the Fidelity Short Dated Corporate Bond fund may work well with its focus on the higher quality part of the UK corporate bond market.

The fund is managed by the experienced Sajiv Vaid and backed by the usual extensive resources at Fidelity.

Unusually, this fund has flown a little under the radar and therefore is only £150 million in size, making it easier for the managers to adjust the positioning. The fund is very diversified as it is spread across bonds from more than 100 different companies including Lloyds, Anglian Water and Heathrow Airport.

Balanced investors:

Monks Investment Trust (MNKS

5-year annualised return: 19.24%
(source: Morningstar)

For many balanced investors, exposure to global equities is a core element of a portfolio and the Monks Investment Trust provides investors with a highly credible actively managed trust from the Baillie Gifford stable.

While slightly in the shadow of its illustrious Scottish Mortgage (SMT) cousin, Monks is much more diversified and less volatile and therefore works well for balanced investors wanting global exposure.

Importantly, the trust still has the growth focus synonymous with Baillie Gifford but in a more controlled manner and still has exposure to the likes of Tesla, Alphabet and Microsoft as well as many other smaller positions too.

Well managed by experienced investors, this trust brings global exposure for an ongoing charge of 0.43% per year.

First Sentier Global Listed Infrastructure Fund (B8PLJ17) 

5-year annualised return: 6.52%
(source: Morningstar)

As the world emerges from hibernation following on from the Covid lockdowns and economies look to get back to full throttle, the importance of high-quality infrastructure has been clearly evidenced.

Whether it is through energy needs, distribution networks or communication services, infrastructure is a key part of a fully functioning economy.

First Sentier Global Listed Infrastructure Fund looks to provide exposure to these areas and more in a global portfolio of infrastructure companies.

With over 40% invested in energy related companies, it provides exposure to many who are leading on energy transformation while also giving exposure to critical distribution infrastructure such as rail and toll roads.

The fund benefits from the experienced team at First Sentier based in Australia who have been at the forefront of infrastructure investing for many years.

Adventurous investors:

Worldwide Healthcare Trust(WWH)

5-year annualised return: 12.54%
(source: Morningstar)

While still in the middle of the pandemic, a healthcare selection might seem like an obvious choice, but Worldwide Healthcare Trust has had a tough time for various reasons.

An underweight to the big Covid pharmaceuticals stocks and an overweight to life sciences, biotech and China, this trust has faced some strong headwinds and lagged its benchmark in 2021.

However, the bigger picture away from the immediate Covid winners’ story is how the rapid drug development of the last 18 months translates into revolutionary new treatments looking forward.

The trust’s manager, healthcare specialist OrbiMed, continues to find attractive opportunities and the issues in China have created further buying opportunities.

In addition, the trust has access to private markets and has been
looking to invest in the unlisted space, now accounting for circa 7% of the trust’s portfolio.

With the long-term drivers behind healthcare well established and further investment set to continue making for an exciting future ahead for drug development, this broad, diversified play on healthcare looks attractive after a period of underperformance.

ASI Global Smaller Companies Fund (B777SP3)

5-year annualised return: 17.86%
(source: Morningstar)

For adventurous investors, exposure to smaller companies is often a key part of a portfolio’s design.

While big companies such as Tesla, Apple and Alphabet take the headlines, it’s often the smaller names that are the engine room of an economy and with global growth set to remain strong in 2022 this could create another strong environment for smaller companies.

The ASI Global Smaller Companies Fund, led by Kirsty Desson and Harry Nimmo, builds on their tried and tested investment process that successfully transitioned to the global scene over a decade ago.

While the name implies exposure to smaller, risky names, smaller companies on a global scale means something very different and therefore many of the companies are big enough to qualify for the FTSE 100, should they ever list in the UK.

Over half the fund is invested in the US with a significant focus on industrial and technology stocks as the team seek out faster growing companies which have momentum.

Income seekers:

CC Japan Income & Growth (CCJI)

5-year annualised return: 7.99%
(source: Morningstar)

Japan has continued to be a shining example of how to manage company balance sheets in recent years with many sat on huge amounts of cash without the millstone of enormous debts.

This is translating into strong dividend growth for investors in the country at a time when income feels like a scarce commodity.

The CC Japan Income & Growth investment trust is run by the
experienced Richard Aston who previously led the Japan team at JP Morgan before joining CC a decade ago.

The trust is yielding 3% and managed to grow dividends during the pandemic as the strength of Japanese companies came through.

The trust uses long term gearing (borrowing extra money to invest)
and therefore will be a little more volatile than peers. Yet for those wanting a potentially growing income stream and diversification away from the traditional income companies, this trust looks interesting.

Jupiter Asian Income Fund (BZ2YMT7)

5-year annualised return: 9.51%
(source: Morningstar)

For many investors who want income, the UK is the obvious place given its traditionally higher yield, but away from the UK, other regions also have strong dividend cultures.

In Asia, dividends have long played a key role in shareholder returns and the Jupiter Asian Income Fund looks to capitalise on this trend.

Manager Jason Pidcock is a cautious investor, seeking out high quality companies that have strong management and governance and a clear focus on the shareholder to ensure dividends are a key part of the company strategy.

The fund is significantly underweight China, preferring the more predictable governments of Australia, Taiwan and Singapore among others.

Asian companies continue to be relatively well managed with low debts, helping support the dividend which currently yields at more than 3% from a concentrated portfolio that includes the likes of Samsung, Taiwan Semiconductors, Macquarie and BHP.

DISCLAIMER: AJ Bell is the owner and publisher of Shares magazine. Shares’ editor Daniel Coatsworth has a personal investment in AJ Bell, First Sentier Global Listed Infrastructure Fund and ASI Global Smaller Companies Fund.

‹ Previous2021-12-23Next ›