100m sprint – Funds for the short-term 

M&G Corporate Bond – The underlying economic sub-plot still remains low growth, low pay settlements, high unemployment, encouraging periodic flights to safety, which will benefit high-quality bond funds. Richard Woolnough was one of the few bond managers to make a positive return in 2008.

JOHCM UK Opportunities – In a period of great uncertainty, this UK All Companies fund has a blue-chip focus, with the likes of GlaxoSmithKline, Unilever and Vodafone among its top holdings. It also has minimal exposure to financials. 


4X100m relay – Funds with the wind in their sails

Our momentum-based research indentifies funds that are currently working well and that we believe will continue to perform for the next six months. 

Cazenove UK Opportunities – It performed well over six months and one year, being one of the few UK All Companies funds to make money during the latter period. Currently the portfolio is split 50 per cent in large cap stocks and 40 per cent in mid caps. 

JOHCM UK Equity Income – Investors with a true income objective must remain focused on funds with a good track record of payout growth. This fund currently has a yield of 4.74 per cent.

Newton Asian Income – In Asia, 30 per cent of returns since 2004 are attributable to reinvested dividends. This fund has a current yield of 4.62 per cent. 

Baillie Gifford American – While we wouldn’t necessarily buy US equities right now, it’s on our shopping list when there is a pronounced weakness in global equities.


Marathon – Funds for the long-term

JPM Natural Resources – This is the longest standing diversified commodity fund. While there are fears of a slowdown in the Chinese economy, a key driver in commodity prices over the last 10 years, the next boom will be driven by other emerging economies, which together dwarf China. Although the fund is down more than 35 per cent in the last 12 months, it is positioned to take advantage of the next stage in the "super cycle". We suggest investors drip-feed. 

M&G Recovery – A fund with a 40-year-plus track record of investing in stocks out of favour with the wider market. 

Jupiter India – With 25 per cent of the world’s population aged under 25, India’s economy will be driven to new levels, with huge potential for investors for decades to come. 


Long-term achievement award: Best fund manager over 10 years

This one goes to Graham French, manager of the M&G Global Basics fund.

Performance of manager vs peer group over 10-yrs



Source: FE Analytics

The fund has produced a total return of 226 per cent over the last 10 years, versus 102 per cent from the FTSE 100. Graham invests in first-world companies growing their profits in third-world countries. The manager has a proven ability to identify those companies that can tap into the demand from the billions of people across the emerging markets who are becoming consumers for the first time. 


Funds for the high jump

Here are two funds investors should be looking to discard if we are right about the pronounced volatility ahead. By no means are these bad funds. We just don’t believe they are appropriate in the volatile period we anticipate:

Standard Life Global Absolute Return Strategies (GARS) – In our view, the FTSE 100 may head towards 4,000 and GARS is moving more in line with the UK stock market at the moment. The fund employs a complex mix of investment strategies. But this compounds the lack of day-to-day visibility, which means we can’t be certain of the underlying risks in turbulent market conditions. 

Invesco Perpetual Corporate Bond – with 38 per cent in bank bonds, this fund has performed strongly over the last six months, up 6.9 per cent. But this was on the back of a flood of liquidity from the European Central Bank. In the event of another bout of investor risk-aversion or a banking crisis, this fund looks exposed.