With this in mind, managing director of business and communications at Bestinvest Jason Hollands (pictured) highlights some of the funds available to investors who have left their dealings to the 11th hour. Cautious outlook
Standard Life Global Absolute Return Strategies
For investors with a cautious outlook, Hollands points to the £15.3bn Standard Life GARS fund, which sits in the IMA Absolute Return sector.
"Bond prices are high and yields are low, so they offer investors returns that may not keep pace with rising inflation and, further out, even the potential for capital losses," said Hollands.
"An alternative for a cautious investor who does not need to draw an income is Standard Life Global Absolute Return Strategies – an umbrella fund for around 30 underlying individual investment strategies covering a multitude of asset classes, including bonds, equities and currencies."
"Unlike many other so-called 'absolute return' funds, which have disappointed and carry high fees, GARS has delivered cash- and inflation-beating returns consistently in each consecutive 12-month period since it was launched, with low volatility that has not been dissimilar to an investment grade bond fund."
Performance of fund vs sector and benchmark since launch
Source: FE Analytics
Standard Life GARS has returned a touch over 39 per cent since its launch in May 2008, beating both its sector average and Libor GBP 6m benchmark.
The fund has been more volatile, though, and lost significantly more during and after the Lehman crash in 2008.
The four crown-rated fund requires a minimum investment of £500 and has an ongoing charges figure (OCF) of 1.59 per cent.
Click here for a guide to understanding the complex Standard Life GARS fund.
Fidelity Moneybuilder Dividend
Although it is a pure equity fund, Hollands thinks the defensive nature of Fidelity Moneybuilder Dividend means it is appropriate for a cautious outlook.
"In our view, from a valuation perspective, equities look a more attractive option than bonds in the current environment and for income seekers we feel the outlook for dividends on UK companies is positive," he said.
"In many cases, UK company dividends are now higher than the yields on their long-term bonds and while the income on the latter is fixed, dividend yields have the scope to rise further."
"For more cautious investors, we like Fidelity Moneybuilder Dividend, managed by Michael Clark, which has a focus on large blue chip companies."
"He places a strong emphasis on determining how sustainable a company’s dividend is and whether it is supported by free cashflow."
"This rigorous and inherently cautious approach has helped ensure this has been one of the least volatile funds in the UK Equity Income sector, while delivering solid overall performance."
According to FE data, the fund has an annualised volatility of just 9.54 per cent over three years, compared with 12.15 per cent from the IMA UK Equity Income sector average, and 13.64 per cent from the FTSE All Share.
Only four funds have a lower score over the period.
The defensive style means Clark’s fund tends to underperform during quickly rising markets; however, it has still outperformed both its sector and the index over one, three and five years.
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
Fidelity Moneybuilder Dividend requires a minimum investment of £1,000 and has an OCF of 1.22 per cent. The fund is currently yielding 4.2 per cent.
Balanced outlook
Liontrust Special Situations
With the outlook for growth still very weak, Hollands says investors with a balanced outlook are better off focusing on funds that are not too heavily exposed to the economic cycle.
"The Liontrust Special Situations fund targets companies, both large, mid-sized and small, that possess distinctive, intangible strengths that competitors will find hard to replicate, such as intellectual capital, distribution channels and business models that have recurring revenues," he explained.
"This approach means the fund looks very different from your bog-standard UK equity fund, which will have a hefty exposure to banks."
"Around 43 per cent of the fund is currently invested in FTSE 100 companies, with 23 per cent in mid caps and 18 per cent in AIM-listed companies."
The fund is headed up by FE Alpha Managers Anthony Cross and Julian Fosh. It is a top-quartile performer in its IMA UK All Companies sector over one, three and five years, with below-average volatility.
Liontrust Special Sits has an OCF of 1.88 per cent and is available for a minimum investment of £1,000. The £762m fund has five FE Crowns.
Threadneedle European Select
While Europe is seen as a risky area, Hollands says funds such as Threadneedle European Select significantly reduce volatility by investing in global companies.
"While Europe’s problems are real and significant, European equity markets nevertheless include some high-quality global businesses that in reality derive much of their revenues outside of the eurozone," he explained.
"These include the likes of Nestle, Anheuser-Busch Inbev and Unilever, whose diverse range of brands have a significant presence in the fast-growing emerging markets."
"The Threadneedle European Select fund, managed by Dave Dudding, has a heavy focus on these types of businesses, which are typically found in core European markets such as Germany and Switzerland."
"The fund has very, very little exposure to Europe’s troubled southern periphery."
Threadneedle European Select is a top-quartile performer in its IMA Europe ex UK sector over one, three, five and 10 years.
Over five years, it has delivered 72.23 per cent, more than tripling the returns of its sector average and FTSE World Europe ex UK benchmark.
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
Dudding’s five crown-rated vehicle is available for a minimum investment of £2,000 and has an OCF of 1.73 per cent. It has £1.86bn assets under management (AUM).
Aggressive outlook
GLG Japan Core Alpha
Hollands tips Japan as a good contrarian play, but says investors need to be willing to take on a lot of risk.
"Markets don’t come more unloved than Japan has been for much of the last two decades," he said.
"As a result, Japanese stocks have been optically cheap for some time, with many companies trading below their book value."
"However, the election of a new government at the end of 2012 has signalled a radical change of policy direction in favour of massive stimulus and aggressive weakening of the yen."
"Although the policy is not without considerable risk, this appears to be resulting in a major reappraisal of Japanese equities, which could have further to run."
To capture this trend, Hollands recommends the GLG Japan Core Alpha fund, which has a deep value approach and a focus on large cap companies.
"One risk for UK-based investors is that returns from share price rises are offset by a weakening currency, so we favour the sterling-hedged share class version of the fund," Hollands added.
The fund is one of the more volatile in the IMA Japan sector, with an annualised score of 20.81 per cent over five years.
On a total return basis, the fund has a strong long-term record, but has had a tougher time in the short- to medium-term, lagging its sector average over one and three years.
GLG Japan Core Alpha requires a minimum investment of £1,000, and has an OCF of 1.66 per cent. The £1bn fund is headed up by FE Alpha Manager Stephen Harker.
First State Global Emerging Markets Leaders
For investors looking for emerging markets exposure, Hollands like the First State Global Emerging Markets Leaders fund, a consistent top-quartile performer in its sector.
"When investing in such a geographically disparate set of countries and regions, it is important to have significant resources at your disposal to be able to put boots on the ground and see these companies," he said.
"One of the leading teams in this respect are the managers of the First State Global Emerging Market Leaders fund."
"These are, of course, more volatile markets, so we like the fact that the First State team takes a more cautious approach compared with some others that have, nevertheless, delivered stellar long-term returns."
The £4bn fund requires a minimum investment of £1,000 and has an OCF of 1.58 per cent. It is headed up by Jonathan Asante and FE Alpha Manager Glen Finegan.