Geopolitical threats, such trade wars between the US and China and Brexit, have cast a shadow over markets for some time now – yet they've continued to find a way to grind ever higher. 
But global growth is now under pressure. The International Monetary Fund recently cut its global growth outlook to 3.2 per cent in 2019, citing the need to reduce trade and technology tensions, and global stock markets have been spooked by the inverted yield curve – unsurprising given that it typically signals a recession is coming our way.
Below are four funds investors may want to consider if the market does face a prolonged downturn.
JOHCM Global Opportunities
This fund has historically been amongst the least volatile in the IA Global sector. Manager Ben Leyland has a strong bias towards larger and medium-sized multi-national businesses in his portfolio, which typically holds 30-40 stocks.
The philosophy of this fund is 'heads we win, tails we don't lose too much', and if markets do struggle, we feel the fund’s strict valuation process will help in this regard. The fund also can, and will, hold large cash positions if valuations are unattractive. It has returned 91.75 per cent in the past five years to 19 August.
Polar Capital Global Insurance
This fund typically invests in 30 to 35 companies. Clearly, exposure is entirely to insurance firms, but the fund rarely invests in life assurers, believing its remit is to provide exposure to companies in the specialist non-life, casualty and risk sectors.
Managed by Nick Martin, it has proven its ability to demonstrate alpha in all market conditions. When assessing individual companies, the manager emphasises underwriting, reserving, balance sheet integrity, management and inside ownership.
Insurance is a low beta sector and tends to be less volatile than the wider market. That has been reflected by the fund's performance: it has produced a positive return in nine of the past 10 years, with its only year of underperformance coming in 2009 when it only fell 2.43 percent Over the five years to end-2018 it has returned 138.34 per cent.
TwentyFour Absolute Return Credit
Absolute return funds have come in for a lot of criticism recently for failing to deliver on their stated goals. This fund does what it says on the tin. It aims to achieve a positive absolute return in any market environment, with a modest level of volatility, over a period of three years.
Having joined the asset manager in 2015, experienced fund manager Chris Bowie invests predominantly in investment grade bonds that are due to mature shortly. The portfolio has been designed to be easy to understand and does not 'short' stocks or borrow any money to boost returns.
What we like is the simplicity behind the fund, which has translated into delivering strong risk-adjusted returns. Since launch in August 2015, the fund has returned 13.83 per cent to 19 August, with 2018 the only year it produced a negative return, albeit a minor one at 1.01 per cent between 2015 and 2018.
Rathbone Strategic Growth Portfolio
Managed by David Coombs, this fund targets cash plus 3-5 per cent per annum over a minimum five-year period and has a big focus on delivering this via a risk-controlled framework.
The multi-asset fund focuses not only on returns, but also on risk and correlation of assets. David uses a disciplined asset-allocation framework and a forward-looking assessment of correlation, risk and return, as the cornerstone of the investment process. Asset classes are then divided into three distinct categories: liquidity, equity risk and diversifiers. The liquidity component currently accounts for almost one-third (31.2 per cent, as at 30 June) of the fund.
Rathbone Strategic Growth Portfolio targets a risk of around two-thirds of equities, so investors are shielded somewhat during market downturns. Over the last five years it has returned 42.06 per cent to 19 August.
Darius McDermott is managing director of FundCalibre. The views expressed above are his own and should not be taken as investment advice.