IFAs Kerry Nelson (pictured) and Alistair Cunningham say that investors should look to a multi asset fund to form the core of their portfolios and then add more specialist areas. Kerry Nelson, managing director of Nexus IFA, says she prefers William Littlewood’s Artemis Strategic Assets fund.
“Pensions are probably the longest term investment you’re going to hold so you can afford to take a calculated risk, more so than you normally would because you’ve got longer to play it out,” she said.
“The Artemis Strategic Assets fund makes great long term play, if you look at the returns he has outplayed everybody recently.”
“It’s a conviction fund; it’s all or nothing. The manager can be quite an aggressive investor and go against the crowd mentality.”
The £976m fund, co-managed by William Littlewoods and Giles Parkinson, has returned 16.65 per cent over three years, beating the IMA Flexible Investment sector average, which was 15.72 per cent. Since the fund’s launch in June 2009 it has also beaten its sector.
Performance of fund vs sector over 3yrs
Source: FE Analytics
Nelson also advises investors looking for longer term growth to add in other more risky funds in the short term if they can monitor them closely.
“If you have a few core funds that don’t need to be checked too often you can then add in a few more punchy funds that are more specialist,” she said.
“I’d particularly recommend a special situations funds such as Marlborough Micro Cap or Marlborough Special Situations. They’re a bit spicier.”
Both funds have performed well over the longer term. With returns since their launch in October 2004 of 382.82 per cent for Marlborough UK Micro Cap Growth and 301.47 per cent for Marlborough Special Situations.
Performance of funds vs sector over 3yrs
Source: FE Analytics
Nelson also says highly specialist funds such as Artemis Global Energy can be a good add on for long term investors but need to be scrutinised more frequently.
“If you go a bit more off the wall and invest in these funds you have to monitor them more, because they are the funds that will be more volatile and where things will change more dramatically.”
“With the more core funds you can leave them more to their own devices.”
“Unless, there is something integral that changes such as the fund manager or the objective of the fund goes completely out of kilter or they go and do something random such as when Invesco Perpetual European Equity decided to go all technology.”
“They’re not there to be changed every month but the funds like Artemis Strategic Assets are just that little bit racy by nature, they must be kept on top of.”
Alistair Cunningham of Wingate financial planning says investors with an appetite for risk and who have a longer term horizon should go for a fund that is mostly in equities.
“Good core funds for the longer term investment horizon will be multi-asset funds. On the active side I like Jupiter Merlin Growth,” he said.
"If you’ve got an appetite for risk and you can stomach it, then you want to go with a fund that’s at least 80-90 per cent in equities.”
“But where someone either doesn’t want to or can afford not to look at it regularly, I’d expect it to outperform a cautious fund.”
“However, if people want a low cost option then I’d recommend passive options such the Architas range.”
“If you want a core fund then there is also an argument to say a passive fund is the better way to go.”
The £1.9bn Jupiter Merlin Growth portfolio is co-managed by three FE Alpha Managers Peter Lawery, Algy Smith-Maxwell and John Chatfeild-Roberts.
It has outperformed its sector over three, five and 10 years. Over 10 years it returned 137.88 per cent compared to 88.55 per cent.
Performance of fund vs sector over 3yrs
Source: FE Analytics
Cunningham (pictured) says the absolute minimum you should hold it for is five years but really you want to be looking at holding it for more than 10 years.
“Because it is equity-based there will be time periods when you could lose money despite having held it for a few years.”
“If you bought in 2004 and held it until 2009 for example, you would have lost money over that period.”
“I don’t believe in timing the market, by all means you can drip feed the money in and not just do it all at once but over a 10 year window the difference will not be significant.”
Jupiter Merlin Balanced would be a good fund for a slightly more cautious investor but still looking to longer term horizon, Cunningham says.
