Most people will be spending June watching the World Cup, rather than checking their investment portfolios, but in an attempt to enlighten our clients on the different characteristics of our recommendations, we have built a balanced team from our top-rated fund list.
Selection Criteria
There are quite a few parallels between picking a winning football team and building a successful portfolio. The starting point is obviously to find the best performers, but then you need them to fit together well. You wouldn’t dream of sending out a team with 11 strikers and similarly, you wouldn’t base your portfolio just around emerging markets. It’s also wise to have a blend of styles so that you can cope with varying conditions. This is where the skill of the manager comes in such as our Chief Investment Officer, Graham Frost. Like Fabio Capello, he has a good track record and is used to dealing with prima donnas!
Goalkeeper
The goalie needs a safe pair of hands to get you out of trouble when all else has failed. It makes sense that this position is reserved for a quality bond fund manager, since these assets are usually the least volatile.
Ian Spreadbury, manager of Fidelity Moneybuilder Income fund is a natural fit for this position. This manager will provide some security and structure to your portfolio. Don’t expect any heroics or flashy play.
Defenders
The main role for these funds is to protect your capital when markets are under pressure, but they also need to be capable of scoring good returns when conditions are right. As with any team, it’s vital that they work well together.
Paul Read/Paul Causer, Invesco Perpetual Tactical Bond. These managers have greater freedom to make changes to the investment portfolio and do not have to rely on rising markets to generate returns. Some similarities to an attacking fullback like Ashley Cole.
(C) Marcus Langlands Pearse, Henderson UK Property (Ex New Star). This fund provides stable income and by investing in physical property it provides diversification away from equities. The qualities of this manager and the sector lend themselves to the captain’s role, held by Rio Ferdinand.
Euan Munro, Standard Life Global Absolute Return Strategies. With a global mandate, he looks at the bigger picture, so is well prepared for any eventuality. The fund is able to make money from selling shares as well as buying them, providing strong defensive qualities, our John Terry.
Adrian Frost, Artemis Income. The equity income sector is a naturally defensive sector. Dividend returns have proved to be more reliable than capital growth, whilst the power of income reinvested provides a robust base for equity investment. Adrian takes Glen Johnsons spot.
Midfielders
Here we are looking for fund managers who are able to deliver growth, provide diversification and stability to the portfolio. Unlike the defensive elements of a portfolio, managers here can take on more risk. However, such funds should not be overly aggressive and act as a core investment element.
Tom Dobell, M&G Recovery. A stock picker who looks for growth in companies under going corporate recovery. Aims to deliver growth but will not take unnecessary risks, in the Stephen Gerrard mould.
Chris Rice, Cazenove European. A cautious manager investing predominantly in large European companies. Rice is positioned to protect investors money and provide growth over the longer term. Expect stability similar to Gareth Barry.
Bradley George/George Cheveley, Investec Enhanced Natural Resources. These managers have flexibility in being able to invest across a wide range of commodities which should benefit the overall performance of a portfolio. Performance is likely to come in sharp bursts, rather like Joe Cole.
Whitney George, Legg Mason US Smaller Companies fund. Investing in US smaller cap offers growth potential and exposure to innovative companies. With greater freedom to express views, this is an area where this manager can add significant value, an enterprising fund similar to Aaron Lennon.
Strikers
We are looking for the goal scorers, areas where growth is most likely to come. These funds are riskier and more susceptible to market movements, their aim is to provide growth to the portfolio. This doesn’t mean the managers take unnecessary risks.
Hugh Young, Aberdeen Asia Pacific. The outlook for the region remains positive for the longer term with a growing middle class and low levels of debt. Hugh Young is an experienced head, a la Peter Crouch, in a volatile market.
Jonathan Asante, First State Global Emerging Markets. Another engine room for growth, however it can be more unpredictable than Asia but has the potential to add significantly to the growth of a portfolio, our Wayne Rooney.
If there is anything you wish to discuss please call one of our Investment Professionals on 020 7189 9999.