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Three funds to back to beat inflation

Anna Fedorova
Written By:
Anna Fedorova

Investors are struggling to find ways to beat inflation, with savings accounts paying virtually nothing. But there are a number of funds out there which can deliver.

Hargreaves Lansdown has outlined three asset classes still able to offer above-inflation returns, and three funds best placed to access them.

Adrian Lowcock, senior investment manager, said flexible corporate bond funds, alongside income funds with either a UK or global remit, are some of the most effective ways to combat inflation.

Below, he highlights three funds across the asset classes which Hargreaves expects to beat inflation over the long term.

UK Corporate Bond – Jupiter Strategic Bond

“Despite talks of the great rotation strategic bond funds were the best-selling sector in April. They offer investors access to the whole market and allow the managers the greatest flexibility to identify opportunities and maximise both income and growth,” he said.

Lowcock said manager Ariel Bezalel is currently holding a large portion of the fund in high-yielding corporate bonds, taking some additional risk, but offsetting this with more stable holdings in areas such as the food industry.

The strategy has worked over the long term, with the Jupiter fund – which has an historic yield of 5.4% – far outpacing inflation.

It has made 27% over three years to 26 April according to Morningstar, also beating the IMA Strategic Bond Sector average of 23.3%.

UK Equity Income – JO Hambro UK Equity Income

Always a popular play in the UK, the domestic equity income sector has  become even more sought after recently as investors focus more on defensive companies with high dividends which make up a large proportion of most UK equity income funds.

Clive Beagles and James Lowen’s JO Hambro UK Equity Income fund currently has a yield of 4.2%, well above inflation, and is one of the stand-out performers over the long term.

The fund is up 41.3% over three years to 26 April, versus the IMA UK Equity Income sector average of 32.6%.

Global Equity Income – Newton Global Higher Income

Another popular fund with a long track record, James Harries’ £3.5bn portfolio has been buying up a lot of stocks in the US, UK and Europe recently, taking advantage of the rally.

The Newton fund yields 3.98% and is up 38.8% over three years to 26 April, the third best performing fund in the sector.

Harries is currently finding opportunities among up-and-coming businesses in higher risk emerging markets, alongside the more traditional global income names.