Global markets have been refreshingly resilient in 2019, as they shrugged off a number of negative scenarios to post positive returns for investors. Who would have thought returns of almost 22 per cent from markets globally – as recorded by the MSCI AC World index – would have been possible after the losses incurred in the final quarter of 2018? 
Dominated by geopolitical uncertainty in the form of trade wars and Brexit, much of the credit for the resilience in markets is down to the move of numerous central banks across the globe to take a dovish stance on rates. It looks like lower rates are here to stay for some time yet and give markets a welcome boost.
So what's in store for 2020?
It would be remiss of me to ignore some of the threats still hanging over global markets. We’ve been in a bull market for more than a decade and we now sit firmly in a late-cycle scenario, where valuations look expensive in a number of markets. However, there are still opportunities out there with Europe, Japan and certain companies in the UK looking attractive given the sentiment attached to them.
Below are five funds for investors to consider for the next 12 months.
Marlborough European Multi-Cap
Of all the members of the team that manages mid and small-cap equities at Marlborough, David Walton is the manager with the biggest valuation-discipline. Europe has been a maligned market for some time now and, as a result, looks cheaper. We always like to play value opportunities with a fund which has a good weighting to smaller companies (this fund currently has 80 per cent in small and micro-caps). I think this fund has a great opportunity to produce strong returns in 2020, particularly if – as many suspect – value has a better year.
BNY Mellon Global Income
This fund saw a change in manager in 2015 and it is testament to both Nick Clay – who now manages the fund – and its process that performance has continued to be good. The focus is on themes and long-term structural changes which can impact the broader economy, such as demographic shifts or technological disruption. Nick wants all of the holdings in the 40-70 stock portfolio to yield at least 25 per cent more than the FTSE World index.
Liontrust UK Micro Cap
This fund is a great example of how resilient burgeoning UK businesses have been despite the threat of Brexit. Since its launch in March 2016, the fund has returned 79.7 per cent (to 20 December) to investors by using the same ‘Economic Advantage’ process that has served the asset manager so well on its UK smaller companies fund. To be eligible for the fund, a company must have at least one intangible asset. These include a strong distribution network, high recurring revenues or a strong brand. Ideally, a company will have more than one of these characteristics, while management will also retain a stake in the business.
First State Global Listed Infrastructure
Infrastructure investment has grown globally in the past decade and the team behind this fund are a recognised leader in the field. The team invest in in ‘hard’ infrastructure such as bridges and ports around the world, via listed companies that own the assets. The 50-stock portfolio also offers a yield of 3 per cent
Man GLG Strategic Bond
Craig Veysey has shown a great ability to make intra-day moves to improve returns. A good example of this was during the recent UK election when he added so much alpha through stock selection alone. The fund is also well diversified from both a geographical and credit perspective. Returns have improved in the past 12 months, with returns of 11.9 per cent (to 20 December).
Darius McDermott is managing director of FundCalibre and Chelsea Financial Services. The views expressed above are his own and should not be taken as investment advice.