Five fund predictions for 2012

As it is widely anticipated that 2012 will see a year of sideways moving markets, next year will see a growing demand for income and defensive funds, Biggar says.

“Dull, defensive and boring appears to be the new vogue for investors and I believe we will need more of the same attitude next year. Funds that control their risk and show an emphasis to preserving capital on the downside will remain popular,” he said.

Here he outlines some funds he thinks are tipped for greatness in 2012.

UK All Companies sector - JOHCM UK Opportunities

A manager with over 10 years investment management experience, John Wood believes the potential of equities is much more attractive than that of heavily indebted government bonds. He tends not to get sucked in by the latest investment fads but rather focuses on companies that generate large amounts of cash that can withstand the test of time. He is a manager to back in times of uncertainty but tends to fall behind the pack a little when growth is strong.

Multi Manager sector - Cazenove Multi Manager Diversity

Marcus Brookes and Robin McDonald have done a great job at controlling the volatility of the fund and have produced top quartile performance this year. Their highly researched process benefits from a combination of asset allocation and fund selection expertise which offers diversification and access to the best specialist fund managers. It combines growth, value and business cycle management styles and the team have produced an enviable and respected track record that positions them strongly for next year.

UK Equity Income sector - Invesco Perpetual High Income

There can only be one obvious choice in the current market conditions and that is Neil Woodford. The investment legend has won many plaudits with his low turnover portfolio (his average stock holding is 10 years) and he is one of the last bastions of true long term investing. No 1 in his sector this year, he is someone to turn to when conditions get tough but is another that can lag behind in strong bull markets. That said this is the fund to hold for 10 years plus. He's a consistent performer who produces a competitive yield (currently 3.9 per cent).

Global Bond sector - Old Mutual Global Strategic Bond

Stewart Cowley is another veteran of the fixed interest world. He has increased his holdings in corporate debt recently however he remains negative in his outlook for Europe and the US and remains positioned for further tightening. Above average performance in every one of the last 5 years and very strong performance over the last 6 months during the Eurozone crisis suggests that if you think the situation will get worse before it gets better, then this could be the fund for you.

Strategic Bond sector - M&G Optimal Income

Richard Woolnough is a veteran manager who is capable of steering his fund through difficult market conditions. His fund tends to outperform peers in down markets. Recent good investment calls has ensured the fund remains firmly in the top quartile and the fund is currently positioned conservatively due to its backing of strong corporate and high yield bonds as well as government bonds that have been held during the Eurozone crisis. A current yield of 5.1 per cent means this is an attractive pick for the income investor.