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The experts’ favourite funds of 2022

20 December 2022

This year was a challenging one for investors but these funds delivered strong performance despite difficult conditions.

By Tom Aylott,

Reporter, Trustnet

Fund managers had their strategies tested in 2022 as soaring inflation and high interest rates pulled many portfolios into negative territory.

However, a number of funds pulled through the volatility and delivered strong performance despite the market drawdown.

Here, Trustnet asks experts for their favourite funds of 2022 that proved to be resilient in a challenging year.


JPM Natural Resources

JPM Natural Resources was the best performing fund of 2022 for Chris Rush, investment manager at IBOSS.

Funds within the IA Commodity/Natural Resources sector were the best performers over the past year, yet this fund was still able to beat its peers, climbing 29.8% in 2022, some 12.9 percentage points ahead of the 16.9% group average.

Total return of fund vs sector in 2022

Source: FE Analytics

The commodities sector is a cyclical one but widespread market volatility and continued disruption to supply chains in China due to overhang from the pandemic have allowed it to shine this year.

Although it can go through periods of sharp highs and deep lows, Rush said that an exposure to commodities is essential and JPM Natural Resources has an attractive long-term horizon.

“An allocation to commodities has been invaluable this year,” Rush added. “Our view is that the long-term outlook for commodities remains strong, and contrary to popular opinion, supply chain issues are not entirely predicated on geopolitical conflict.”


Fidelity American Special Situations

Rob Morgan, chief investment officer at Charles Stanley, said that “long-forgotten” value funds have come to the forefront in 2022 and reminded investors of their importance.

One such fund was Fidelity American Special Situations, which made a total return of 7.2% over the course of the year despite the average portfolio in the IA North America sector plummeting 9%.

It’s value-orientated strategy was a perk, but Morgan noted its 20.3% allocation to healthcare and 10.6% exposure to energy also provided a healthy booster throughout the year.

Total return of fund vs sector in 2022

Source: FE Analytics

Indeed, its 6.8% exposure to technology was 19.6 percentage points below the S&P 500 benchmark’s, which helped offset some of the US’s biggest downturns.

Morgan said that Fidelity American Special Situations “has proven itself as good diversifier to more growth-orientated funds” that the US market is renowned for.

He added: “Although it has a significant value tilt, the managers thoroughly assess measures of quality, including balance sheet strength, asset backing, resilience of the underlying business model and market position.”


Redwheel Global Equity Income

Tom Sparke, investment manager at GDIM, was most impressed by the Redwheel Global Equity Income fund in 2022.

He liked that it exhibited little volatility despite the difficult market conditions and delivered a positive return whilst many of its peers sank.

Indeed, the fund was up 3% over the year, outperforming the IA Global Equity Income average by 4.5 percentage points.

Total return of fund vs sector in 2022

Source: FE Analytics

Sparke credited this performance to the fund’s broad sector exposures, which allowed it to remain resilient throughout difficult periods.

Likewise, the 2.7% yield was a helpful contributor and its price-to-earnings ratio of 13x makes it attractively undervalued compared to the wider market.

Sparke said: “Looking ahead to what might be a difficult recessionary year, equities may not post the best returns from capital growth so the yield and the high level of profitability that this fund exhibits may be even more key.”


Ruffer Diversified Return

Gavin Haynes, investment consultant at Fairview, said that his favourite fund of 2022 was Ruffer Diversified Return.

It is relatively new, having been launched in September last year and is an open-ended version of the Ruffer Investment Company. Both portfolios put capital preservation at the heart of their strategies, with the main objective being to not lose money and beat cash returns.

Total return of fund vs sector in 2022

Source: FE Analytics

Haynes said that he liked the fact that it delivered a positive return of 3.4% throughout the course of the year despite the market downturn.

It can be held as a defensive position within investors’ portfolios to add diversification and downside protection during volatile times.

Haynes said: “They were one of the few managers who got to grips early with how serious the inflationary pressures were and used real assets, a value equity strategy and inflation-focused bonds to good effect.

“Whilst there have been changes to the management team I believe this fund remains an excellent core defensive bedrock for a portfolio.”

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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.