The company’s analysts propose a portfolio for each major market region around the world.
This could be a year that the asset management industry will try to forget. The Investment Association (IA) has recorded negative net fund inflows every month this year except April, with £7.6bn withdrawn in September alone.
Understandably, sentiment among investors has hit rock bottom given the barrage of bad news this year. However, at times like these, it’s worth remembering that investing is a long-term game, and all funds will suffer from short-term periods of underperformance.
While it may be tempting to cash in on investments during times of market stress, the fund’s success should be measured by its ability to achieve its goals consistently and over the specified investment horizon.
We believe the following five strategies have the potential to do just that, and are therefore worth considering as we enter 2023.
British Stocks – John Monaghan’s Man GLG Invalued Assets fund
The Man GLG Lowvalued Assets Fund aims to grow investors’ capital by discovering preferred opportunities. Its managers invest with a high level of conviction in the recovery potential of the business and have the discipline to keep their nerve to keep investing while others flee.
This contrasting approach, combined with the fund’s weighting of medium and small companies, means it may look and act very differently from its peers and its FTSE All Share standard.
The fund has been successful in achieving its long-term goals, with periods of outperformance, and while it may lag when growth stocks are in leading markets, the current background should be supportive of this strategy.
Global Equities – Ajay Vaid on the Dodge & Cox Global Stock Fund
This fund also aims for capital growth by focusing on a long-term view. The portfolio is usually biased towards undervalued companies, as their managers seek to assess the true value of a franchise.
However, they are not entirely at the mercy of this style of investing and in momentum- or growth-driven markets, their performance may provide greater consistency relative to funds with an overt focus on value.
While its return profile can show periods of increased volatility against the broader global stock market, we believe that over the full market cycle, investors should be well rewarded on a risk-adjusted basis.
Fixed Income – Eduardo Sanchez at TwentyFour Income Strategic Fund
The team behind the TwentyFour Strategy Income fund aims to create a healthy level of income by taking advantage of opportunities across the world of fixed income including government bonds, corporate bonds, blended credit and asset-backed securities.
Managers have strong credit selection abilities and macroeconomic expertise, the latter of which helps them identify and protect against so-called “left tail” events.
By their nature, this would be unlikely, but they could have a severely negative effect on securities prices if they did occur, but historically the team has a good record of spotting them.
While there is no guarantee that the team will always be able to do this or be able to put effective protections in place when it does, it should be a relief for investors that they are alert to such eventualities.
ALTERNATIVES – Charles Hovenden in a BlackRock European Absolute Alpha box
This fund’s goal of providing a positive return over any twelve month period in all market conditions through long and short investments in European stocks will undoubtedly attract many investors given the current market background.
In fact, since its launch in April 2009, this strategy has delivered consistent mid-single-digit returns with only one calendar year where it posted a negative return (2016).
Its managers are experienced long/short investors who have an excellent alpha generation track record on both sides of the investment book and who maintain a portfolio with low net market exposure, where the focus and driver of returns is stock selection.
Responsible Investing – Alex Farlow in M&G’s Sustainable Multi-Asset Balanced Portfolio
The managers of this portfolio have the goal of capital accumulation which they seek to achieve by adopting a risk management approach to asset allocation.
The range within which the portfolio falls differs from a number of its peers who tend to favor more innovative growth areas of the market, favoring a more valuation-sensitive investment approach from an asset allocation and fundamental investment perspective.
The investment process is clearly articulated and articulated and combines different sustainable approaches with a specific allocation of investment impact, which is up to 50% of portfolio assets.
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