As a result, the firm has been buying more defensive portfolios to help protect in the case markets “blow up”.
“We are at the stage of the bull market where it’s getting more mature,” Bartles said.
“Returns won’t be as good as last year and there will be more volatility.”
He adds that the key to managing your portfolio in markets that are heating up is to avoid the crisis areas.
“There are still a lot of things out there which could blow the global economy up,” he said.
As a result, Bartles says the firm has picked funds that are positioned for volatility and are able to take advantage of any weakness in the market.
Premier Defensive Growth
One fund that Barmac has picked up to dampen volatility since the start of the year is the four crown-rated Premier Defensive Growth, headed up by Paul Smith.
The Premier fund, which sits in the IMA Targeted Absolute Return sector, hasn’t shot the lights out, but it has beaten the sector and Libor GBP 3m benchmark over one and three years.
The fund has made 13.79 per cent since launch in December 2010, rising ahead of the sector and beating its cash benchmark by more than 10 percentage points.
Performance of fund vs sector and index since launch
Source: FE Analytics
Among the top holdings in the portfolio are the Acorn Income trust and the Electra and F&C Private Equity investment trusts.
UK equities are the highest weighting in the portfolio, at 34.88 per cent.
The fund requires a minimum expenditure of £1,000 and has ongoing charges of 1.17 per cent.
Unicorn Free Spirit
A fund that Bartles says dovetails well with Premier Defensive Growth is FE Alpha Manager John McClure’s Unicorn Free Spirit portfolio.
“This fund operates in a nice space. It should help combat volatility, but it is also a good stockpicking fund, which may help it outperform on the upside if markets have a middling year,” he said.
The tiny £25.9m fund has packed a big punch over its history, outperforming the IMA UK All Companies sector and FTSE All Share over one, three, five and 10 years.
Over the last five years, the fund has made 196.85 per cent. The sector and All Share made 124.82 per cent and 115.15 per cent, respectively.
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
McClure tends to invest further down the market cap spectrum in all of the funds he runs, including Unicorn UK Smaller Companies and Unicorn UK Income.
His top-10 holdings in Unicorn Free Spirit include FTSE 250 entertainment corporation Entertainment One and AIM-listed cloud computing firm Iomart Group.
Telecommunications, media and technology stocks are the largest weighting in the fund, at more than 60 per cent of the portfolio.
Unicorn Free Spirit is available via select platforms.
Henderson Global Technology
A technology fund wouldn't usually be the first port of call for cautious investors, but Bartles says the £391m Henderson Global Technology fund has decent capital protection properties.
“It’s a good defensive play, believe it or not,” he said.
“Technology companies tend to be cash-rich and absorb volatility. They tend to underperform on the upside but outperform on the downside.”
The fund has a solid long-term track record, outperforming the IMA Technology & Telecoms sector and the MSCI Information Technology index over the last decade.
It has continued to deliver positive returns over the last one, three and five years, although it has lagged behind the sector and index over each period.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
More than 75 per cent of the fund is invested in North American companies, with Apple, Google, Facebook and Microsoft featuring in its top-10 holdings.
The fund requires a minimum expenditure of £1,000 and has ongoing charges of 1.82 per cent.
It is managed by Stuart O’Gorman and Ian Warmerdam.
TwentyFour Monument Bond and TwentyFour Dynamic Bond
Other funds Bartles expects to perform well in tough markets include PFS TwentyFour Dynamic Bond and PFS TwentyFour Monument Bond.
Both portfolios have impressive track records in what has been a difficult market for bonds.
“These funds help protect against any ups and downs in the bond market,” Bartles said.
The £185.8m Dynamic Bond fund has a yield of 5.58 per cent, one of the highest in the IMA Sterling Strategic Bond sector.
It has also outperformed the sector and cash index over one and three years.
The fund has made 31.1 per cent since launch in April 2010, compared with 24.1 per cent from the sector and 2.81 per cent from the Libor GBP 3m index.
Performance of fund vs sector and index since launch
Source: FE Analytics
The Monument Bond fund, which sits in the IMA Specialist sector, has also consistently beaten its cash benchmark.
The fund has made 12.75 per cent over the last three years, compared with a mere 2.19 per cent from the Libor GBP 3m index.
Brewin Dolphin’s Ben Gutteridge recently tipped the TwentyFour Monument Bond fund for cautious investors.
Both funds require a minimum expenditure of £1,000 and have ongoing charges of 1.36 per cent.
