Five funds to buy, hold and forget about
Four IFAs recommend products for investors with a long-term view and a hands-off approach to portfolio management.
Jupiter Merlin Income
"For this sort of timeframe, you could look at a multi-manager fund as this would give you instant diversification, and if you are going to take this approach I think Jupiter Merlin Income is a good bet," said Adrian Lowcock, senior investment adviser at Bestinvest.
Darius McDermott, managing director of Chelsea Financial Services, agrees with him: "Jupiter Merlin is a good franchise, a one-stop shop for asset allocation and fund selection. The only concern is that with it being a multi-manager fund the TER [2.33 per cent] is slightly higher."
Jupiter Merlin Income is run by three FE Alpha Managers in John Chatfeild-Roberts
, Peter Lawery
and Algy Smith-Maxwell
. According to FE Analytics
, it has returned 22.15 per cent over the past five years, compared with 8.33 per cent from its IMA Mixed Investment 20%-60% Shares sector.
Aberdeen Asia Pacific
Kerry Nelson, managing director of Nexus IFA, would opt for something a little more ambitious: "If you are going to go for a punt, which you can probably afford to do considering you are looking at such a long-term horizon, then I would go for a Far East fund or a BRIC. Aberdeen Asia Pacific is brilliant, I can’t say anything more than that. It’s got an extremely specialised team, and aside from First State, no one can touch them in that sort of market."
McDermott added: "We like Asia for the longer-term, when you are investing for a child you can afford to take on more risk. My only concern is that again it has a higher AMC [1.75 per cent]."
data shows the fund, which is headed up by Aberdeen’s Asian Equities team, has returned 74.69 per cent over five years, compared with 50.82 per cent from its IMA Asia Pacific ex Japan sector. Its TER is 1.84 per cent.
Rathbone Global Opportunities
"Rathbone Global Opportunities doesn’t invest directly in emerging markets although it will invest in companies with exposure to these," McDermott said. "The manager [FE Alpha Manager James Thomson
] is still young even though he has been there eight years. He had one bad year in 2008 but he reacted well to that and has changed his strategy to a more cash-generative model."
Nelson added: "This isn’t on my buy-list, but for that middle-niche it’s not bad. The manager’s got some good ideas and the fund has that global philosophy."
According to FE Analytics
, Rathbone Global Opportunities has returned 28.49 per cent over the past five years, compared with 12.7 per cent from its IMA Global sector. It has a TER of 1.57 per cent.
Invesco Perpetual Income
Nelson continued: "I’d always recommend equity income if you are just going to buy one fund and are going to be making monthly contributions. It would be easy to say one of the Invesco Perpetual Income funds."
Clive Collins, director of McCarthy Taylor, echoed Nelson’s view: "We’d always go for an income-based fund, such as Invesco Perpetual Income, assuming the client is happy with the risk. It contains everyday good bellwether companies and targets a decent income yield."
According to FE Analytics
, Neil Woodford's Invesco Perpetual Income
has returned 13.07 per cent over five years compared with 0.18 per cent from the IMA UK Equity Income sector. Its TER is 1.68 per cent and its yield currently stands at 3.72 per cent.
M&G Global Dividend
McDermott likes the fact that dividend growth is at the core of this fund’s philosophy. "It has a good three-year track record and we’ve had it from very early on in its lifespan, since it was 18 months old," he said. "It also has some exposure to emerging markets. The manager [FE Alpha Manager Stuart Rhodes
] has a very good track record."
Nelson commented: "This is a good fund for people who are a bit more cautious and maybe invest on an ad hoc or monthly basis. Although if you are investing for a time period of around 16 to 18 years, why would you be so cautious?"
Despite Nelson’s misgivings, the fund has returned 53.63 per cent since its launch in July 2008, compared with 22.1 per cent from its sector average. It has a yield of 3.24 per cent and a TER of 1.69 per cent.