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AJ Bell’s funds for investors of all risk tolerances

21 December 2021

Investment research head Ryan Hughes reveals which funds he thinks might work for cautious, balanced, adventurous and income portfolios in 2022.

By Gary Jackson,

Head of editorial, FE fundinfo

Funds that can protect from volatility in the bond market, are exposed to the drivers of global growth and offer income away from the UK market are among those being backed by AJ Bell’s Ryan Hughes next year.

Below, Hughes – the head of investment research at AJ Bell – gives four open-ended funds for cautious, balanced, adventurous and income investors to consider.

 

Cautious investors: Fidelity Short Dated Corporate Bond

Although higher inflation and expectations of interest rate hikes are challenging fixed income, many investors – especially those with a more cautious stance – may still want to own bonds.

Hughes suggested these investors keep duration short to help dampen volatility and protect against capital losses, leading him to point to the Fidelity Short Dated Corporate Bond fund with its focus on the higher quality part of the UK corporate bond market.

Performance of fund vs sector over 5yrs

 

Source: FE Analytics

Fidelity Short Dated Corporate Bond, which is managed by the “highly experienced” Sajiv Vaid, sits in the fourth quartile of the IA Sterling Corporate Bond sector over five years. However, it has jumped into the top decile over 2021 so far as inflation concerns have rattled fixed income markets.

“Unusually, this fund has flown a little under the radar and therefore is only £150m in size making it easier for the managers to adjust the positioning, while the fund is very diversified as it is spread across well over 100 different companies with names such as Lloyds Bank, Anglian Water and Heathrow featuring in the largest holdings,” Hughes added.

 

Balanced investors: First Sentier Global Listed Infrastructure

For balanced investors, AJ Bell’s head of investment research opted for First Sentier Global Listed Infrastructure as it invests in an asset class that would be expected to perform well as economies continue to recover from 2020’s widespread lockdowns.

The fund is managed by Peter Meany and Andrew Greenup. Hughes noted that the Australia-based team at First Sentier has been at the forefront of infrastructure investing for many years.

Performance of fund vs sector and index over 5yrs

 

Source: FE Analytics

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

“The First Sentier Global Listed Infrastructure fund looks to provide exposure to all of these areas and more in a global portfolio of infrastructure companies.”

 

Adventurous investors: ASI Global Smaller Companies

Despite all the attention heaped upon a handful of big names such as Tesla, Apple and Alphabet, it is often smaller companies that are the driver of economic growth and a source of strong long-term returns for investors.

If global growth remains strong in 2022, then smaller companies could be the main beneficiary and, to this end, Hughes pointed to the ASI Global Smaller Companies fund. Kirsty Desson is its lead manager, after co-manager Harry Nimmo stepped back from management duties, although he remains a researcher and analyst for the portfolio.

Performance of fund vs sector over 5yrs

 

Source: FE Analytics

“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 would qualify for the FTSE 100,” Hughes added.

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

 

Income seekers: Jupiter Asian Income

The UK has been the traditional hunting ground for income investors given its higher yield, but Hughes noted that other regions have strong dividend cultures.

Dividends have long played a key role in shareholder returns in Asia and, for this reasons, Hughes likes the Jupiter Asian Income fund. It currently has a dividend yield of 3.6%, compared with 3.5% from the FTSE 100.

Performance of fund vs sector and index over 5yrs

 

Source: FE Analytics

“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,” Hughes said.

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

 

Name Sector Fund Size Fund Manager Yield OCF
Fidelity Short Dated Corporate Bond IA Sterling Corporate Bond £153m Sajiv Vaid, Kristian Atkinson 3.68% 0.24%
First Sentier Global Listed Infrastructure IA Infrastructure £1.6bn Peter Meany, Andrew Greenup 2.44% 0.79%
ASI Global Smaller Companies IA Global £1.9bn Kirsty Desson 1.05%
Jupiter Asian Income IA Asia Pacific Excluding Japan £799m Jason Pidcock 3.60% 0.98%

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.