ISA tips: four funds for the cautious investor
Jupiter Strategic Bond fund
Strategic bond funds typically invest across the entire range of fixed income. They offer diversification and the manager can allocate your money to the areas that offer the best returns for the risk they hold.
This fund, managed by Ariel Bezalel, focuses on macroeconomic research, analysing global monetary policy, as well as data relating to economic activity. Ariel looks to control losses and will even sacrifice yield to preserve capital. The majority of the fund’s positions are in less risky corporate (44.1%) and government (43.7%) bonds. Ariel is also able to take some ‘short positions’ and benefit when bond prices fall as well as rise.
Axa Sterling Credit Short Duration
This fund has one eye firmly on risk by only investing in high quality bonds with a short time before maturity. Shorter-term bonds are deemed to be less risky as the manager can be more certain the company will be able to pay off the debt and they are less likely to be impacted by issues such as changing interest rates.
Manager Nicolas Trindade seeks to invest in bonds due to mature within five years and issued by companies unlikely to default during that period. These bonds are then typically held to maturity to reduce costs. The portfolio is well diversified and structured, so that approximately 20% of the holdings mature each year.
Premier Multi-Asset Monthly Income
This fund sits in the Investment Association Mixed Investment 20-60% shares sector – which means it aims to hold between 20% and 60% equities. The fund is managed by David Hambridge and his team and has a multi-manager structure, which allows it to invest in funds of other specialist fund managers.
The fund is managed to provide equity-like returns but with less volatility through this multi-asset/multi-manager structure. As the name indicates, the fund pays a monthly income to investors and has a historic yield of 4.8%.
Rathbone Strategic Growth
This fund – which is also a multi-asset product – is managed by David Coombs and looks to target a specific level of risk and then maximise returns. David invests in actively-managed funds and investment trusts, as well as passive funds and direct equity holdings. A lot of focus goes on making sure the underlying assets are not too correlated (they don’t all move in the same direction at once).
David has more than two decades experience managing multi-asset funds. The fund currently has a 59.69% exposure to equities, while over one fifth (21.77%) is held in cash or cash related instruments.
Darius McDermott is managing director of Chelsea Financial Services