All of the following funds have been rated 4 or 5 stars by our Research Team, and are run by fund managers that we think are most likely to add value within their sector. They have investing styles that are likely to be well-suited to market conditions over the next year. For a full list of our top-rated funds across all sectors, you can use our Fund Search Engine.
Choosing the best fund managers
Fund managers change jobs, on average, every four years – so the past performance records of many funds quoted by the press and in adverts should not be regarded as a reliable indicator of the future. Our solution to this problem is to track the performance of the individual manager and not the fund.
Bestinvest’s unique Manager Record Index (MRI) looks at the manager’s performance through their career in a particular sector. Coupled with hundreds of face-to-face meetings, our Research Team is able to gain an understanding of whether a manager has been skilful, or just plain lucky.
Rating the funds
We assign a 4 or 5 star rating to all our top-rated fund selections in each asset class. Our ratings also reflect our Research Team’s tactical views on which style of fund is most likely to perform well in the prevailing environment.
Bonds
Legal & General Dynamic Bond
The Legal & General Dynamic Bond fund, managed by Richard Hodges, is an aggressively managed strategic bond fund. This is a total return, fixed income mandate which enables the manager to invest across the full bond spectrum, with minimal formal constraints on the allocation between investment grade and high yield debt. The fund carries no specific yield target, with the emphasis very much on maximising total returns whether these are through capital appreciation or income. The fund mandate also enables the manager to make use of financial derivatives. We believe the concept of this best ideas mandate, combined with the experience of the underlying manager and resources of the L&G Group, represents a strong investment proposition.
Equities – UK Equity Income
Standard Life UK Equity High Income
The Standard Life UK Equity High Income fund is our pick for the sector. The aim of this fund is to produce an above average level of income as well as capital growth by investing in cheap stocks with improving fundamentals. The fund’s manager, Karen Robertson, follows a house process that aims to identify change ahead of the market. The process utilises Standard Life’s proprietary house model as well as incorporating the manager’s own skills. The fund is appropriate for those looking for exposure to large and mid cap UK stocks producing above average income.
Equities – UK All Companies
Cazenove UK Growth & Income
The Cazenove UK Growth & Income fund is a core UK equity fund with an income bias. The manager, Tim Russell, follows a ‘business cycle’ approach to investing, attempting to add value with judicious sector rotation calls in line with the macroeconomic environment. There are some constraints in place that limit the fund’s exposure to small and mid cap stocks. Changes in the business cycle or “inflection points” are catalysts for portfolio changes.
Equities – Asia & Emerging Markets
First State Asia Pacific Leaders
The First State Asia Pacific Leaders fund is run by Angus Tulloch, a highly experienced manager with an absolute return mindset to investment. Historically, this style has provided greater downside protection, whilst usually at least matching benchmarks in rising markets. The manager’s focus is on high quality, shareholder-friendly companies, generally with a market capitalisation of at least $1 billion in Asia (excluding Japan). The fund adopts more of an emphasis on preservation of capital compared to its peer group, as a consequence index out-performance is not a primary driver of investment decisions.
Property
New Star UK Property
The New Star UK Property fund aims to achieve a high and growing income, together with some capital appreciation, by investing approximately three-quarters of its assets directly in bricks and mortar property with the balance in UK listed property company shares, although currently the fund has no exposure to listed property securities. The portfolio consists of an above average allocation to higher quality tenants on long leases. We believe this profile is preferred, given the uncertainties that still persist with regard to the economic backdrop.
Absolute Return
Gartmore UK Absolute Return
The Gartmore UK Absolute Return fund aims to deliver returns in all market conditions by investing in companies which are based or conduct most of their business in the UK. It can invest in mid or large cap sized companies, but there is a bias towards FTSE 250 companies. Ben Wallace has demonstrated he can add value through his tactical strategy and we believe this fund provides an attractive option for investors seeking core hedge exposure. The fund’s ability to buy and sell stocks using derivative instruments may increase potential risk.
Commodities
Investec Enhanced Natural Resources
The Investec Enhanced Natural Resources fund targets long term capital growth by investing worldwide in commodity related equities and in direct commodities (via derivatives). Whilst it does not have an absolute return mandate, it is able to go short and should be expected to exhibit less volatility than a broader commodity index. The fund can invest across the entire spectrum of resource equities including metals, mining, energy, soft commodities, agriculture and related industries. The fund currently has a large weighting to platinum (physical) and gold (equities).
Your 2010 ISA
All the funds mentioned above are available inside a Stocks and Shares ISA. You can invest within an ISA using our online application. If you have already used this year’s allowance you can still invest outside of the ISA wrapper and buy online. Existing clients may prefer to invest through their client centre.
If there is anything else you wish to discuss please call one of our Advisers on 020 7189 9999.