If you are not yet done with your Christmas shopping, Trustnet has got you covered.
Although the end of the year is a time of rest and relaxation for many, not all have the time to spend researching investments.
Investors who don’t have the time to do extensive research, who are perhaps new to investing, or are looking to move from cash, might want to only buy one fund this Christmas.
But with markets changing, now might be the time to move to a one-stop shop that can take the stresses of market timing and style shift away from you.
Before we begin, Kelly Prior, investment manager in the multi-manager team at Columbia Threadneedle Investments, had a disclaimer, as she highlighted how there’s never one single answer to this question.
“The one fund I would buy my 12-year-old son, who can suffer a bit of short-term volatility for long-term capital appreciation and has no need for income, would be the polar opposite to that of my 84-year-old uncle, who would want to focus on capital preservation and income and has scant time for volatility,” she said.
Indeed, much will depend on your attitude to risk, your time horizon and how you wish to play markets.
The fashionable gift
However, she did have a pick that “is ripe for the picking right now, which may not always be the case”, and that was the £2.9bn Henderson Strategic Bond fund.
“In the near two decades that this fund has been in existence, it has had the overwhelming majority of its assets in any one of the following: high yield, investment grade corporate bonds or government bonds,” she said.
In this strategy, cash has frequently been well over 10%, while credit default swaps (CDS) can be seen as a standard tool used at times of market dislocation.
“What this reflects in this fund is a team that is not afraid of conviction investing, but also who are prepared to change their minds and positioning when the opportunity set and market change. Since the global financial crisis the team has lent heavily on rates views to generate alpha, with carry-on high-quality corporate bonds to supplement their returns," said Prior.
Performance of fund against sector over 10yrs
Source: FE Analytics
The all-rounder
Rob Burgeman, investment manager at RBC Brewin Dolphin, chose a tracker, specifically the iShares Core MSCI World exchange-traded fund (ETF), which “does exactly what it says on the tin” and follows the MSCI World Index at a cost-effective 0.2%.
“Unlike an active fund, it isn’t going to take a view about whether shares in, say, Tesla are expensive, or others are cheap and, as an equity-only fund is likely to be relatively volatile. Nevertheless, as a core building block to a portfolio, it is hard to look past the attractions of this fund,” he said.
It has around 66% in the US, with the next biggest markets being Japan (6.2%), the UK (4.7%), Canada (3.5%), Switzerland (3.3%) and France (3.2%), and its largest holdings are mostly well-known names such as Apple, Microsoft, Amazon, Alphabet (the parent company for Google and YouTube), Tesla, Johnson & Johnson and US-based health insurance company United Health.
“Its holdings and weightings will, of course, change over time to reflect the size of companies, so is likely to remain relevant for years to come,” he said.
Performance of ETF against sector and index over 10yrs
Source: FE Analytics
The novelty gift
Tom Sparke, investment manager at GDIM, went for the £2.5bn Baillie Gifford Positive Change portfolio. “As a fund to buy and hold this one has demonstrated its worth in its relatively short history so far,” he said.
“It is a high-conviction, long-term global fund with a heavy emphasis on those companies providing a net positive contribution to society and the environment. It does have a higher level of volatility than most global offerings, but its performance has been excellent, and the Baillie Gifford team’s unwavering long-term view allows them to pick the winners of the future.”
The fund has a FE fundinfo Crown rating of four and is co-managed by FE fundinfo Alpha Managers Kate Fox and Lee Qian.
Performance of fund against sector and index since launch
Source: FE Analytics
The exotic gift
Darius McDermott, managing director of FundCalibre, opted for an investment trust, JP Morgan China Growth and Income, seeing the potential for a double whammy if the Chinese market does better and the trust's 5.7% discount closes.
“China is very cheap on both an absolute and relative basis at the moment. Government intervention in the economy over the past 18 months, coupled with strict Covid policies and markets not liking the outcome of the party congress in November, has left the market very unloved,” he said.
“But it was announced last week that the zero-Covid policy is relaxing and that may well kick start things back in China's favour. While growth has been slowing, it is still the world's second-largest economy and, unlike other parts of the world, China has been cutting rather than raising rates.”
This particular trust, with £288m of assets under management, has a great track record and invests in Hong Kong and Taiwan as well as A shares, is growth-orientated but also pays an income.
“It's a pretty good all-rounder for investors wanting exposure to this part of the world,” McDermott concluded.
Performance of trust against sector and index over 10yrs
Source: FE Analytics
The gift for the adventurous
Jason Hollands, managing director at Bestinvest, picked the $862m global equity fund Fiera Atlas Global Companies.
Manager Simon Steele, who joined Fiera in 2021 from AMP Capital, bringing the fund along with the team, aims to achieve superior and sustainable returns of above 10% per year (before charges) by investing in a concentrated portfolio of 25 to 35 global companies.
Performance of trust against sector and index over 10yrs
Source: FE Analytics
“The team looks for companies backed by sustainable and diversified cash flows that will ‘unlock the magic’ of compounding,” said Hollands.
“Steele expects to produce long-term capital growth with lower risk of capital loss than broader global equity markets over a full investment cycle of between five and seven years. The team uses a fundamental, bottom-up investment approach, selecting stocks with a competitive advantage, management teams that allocate capital wisely and that possess runways for sustainable growth.”