You might therefore expect these and other factors to have provoked major market jitters.
However, market volatility has been incredibly low in recent months, with the VIX Index, a measure of US stock market volatility, at its lowest levels in a decade.
Performance of indices over 3yrs
Source: FE Analytics
Officials at the US Federal Reserve Bank have begun to wonder whether there is too much complacency over risk and some investment commentators are opining as to whether sanguine markets might represent the “calm before the storm”, pointing to a drop in volatility in 2007 on the eve of the credit crisis.
In reality none of us has a crystal ball to tell us what markets will do over the short term.
We remain positive on the outlook for equities over the next few years and the longer term.
However, after the strong returns on developed stock markets in 2013 which has propelled some stock market indices to record levels, the near term outlook is less clear.
As we edge towards more normalised monetary policy, you might expect less synchronisation across asset classes and a greater opportunity set for multi-asset and absolute return funds.
Here are five trusts that may be of interest, which all specialise in delivering positive returns no matter what the market is doing.
Personal Assets Trust When the bears come out of the woods, this is one trust you will want in your portfolio.
Now managed by Sebastian Lyon (pictured) and colleagues at Troy Asset Management, it targets absolute rather than relative returns through diversification across major asset classes – equities, bonds, gold and cash – and a strong emphasis in investing in companies at attractive valuations.
Performance of trust and index over 3yrs
Source: FE Analytics
When markets look expensive, this trust will raise cash levels rather than over-pay.
The shares are currently trading broadly at NAV (net asset value), and it uses a discount control.
Ruffer Investment Company
This stock exchange listed investment company targets returns of 10 per cent a year but with a strong emphasis on capital preservation.
Performance of trust and index over 7yrs
Source: FE Analytics
Instead of utilising complex derivative investments, it manages risk by investing across a diverse range of asset classes such as equities, index-linked bonds and precious metals, based on the management team’s reading of the trends driving the global economy and where they see the market opportunities and risks.
The shares are currently trading at a 1.3% discount to NAV. Steve Russell and Hamish Baillie are managers.
Bluecrest AllBlue IT
So-called hedge funds, those which aim to make money whatever the market climate, have historically only been available to the very wealthy and institutional investors.
However, this stock exchange listed company provides access to a selection of underlying funds managed by BlueCrest Capital each of which follows a distinct strategy with the combined goal of generating positive returns on a consistent basis with levels of volatility around 6-8 per cent, which is broadly between the levels you might see on bond funds and equities.
The shares are currently trading at a 3.9 per cent discount to NAV.
BH Global IT
BH Global is another listed investment company that provides access to a portfolio of underlying funds managed by leading hedge fund group Brevan Howard, with no more than 15 per cent of the portfolio allocated to a single trader.
The range of strategies includes interest rates, foreign exchange, trading volatility, equities, commodities and credit.
The shares on BH Macro GBP are currently trading at a 9.7 per cent discount to NAV.
Boussard & Gavaudan Holdings IT
This London and Amsterdam listed investment company feeds into multi-strategy hedge fund focused primarily on European investments across a range of asset classes including equities, credit, volatility and convertible bonds.
The trust had a tough time in 2011 and 2012, and has seen the discount go onto a discount of more than 20 per cent.
It has the best record of the three hedge fund strategies over five years, though.
BH Global has the lowest volatility, protecting most effectively on the downside in 2011.
Performance of trusts and index over 5yrs
Source: FE Analytics
Boussard & Gavaudan Holdings has a target return of 10 per cent per annum net of fees.
