Four ‘gift card funds’ for the stumped investor

While it is commonly known as the season to be jolly, it doesn’t mean that Christmas is without its stresses. Not only do we have cards to write, in-laws to entertain and nativities to watch, but the prospect of buying the perfect present is enough to leave many in a cold sweat.

The saving grace for those who are stuck for ideas tends to be the gift card – a catch-all and versatile present, invented to minimise disappointment.

Multi-asset funds could be described as the gift card of the investment world. Boasting well-diversified portfolios, they can be a good option for investors who are undecided as to where to put their money – especially when the outlook for both markets and economies is so uncertain.

Here, we give four examples of multi-asset funds and why they could present themselves as good options for the stumped investor.

1. LF Ruffer Diversified Return

This is an absolute return vehicle which has the protection of investor capital at the heart of its process. The fund aims not to lose money on any 12-month rolling basis, with a strong emphasis on providing genuine protection in times of market stress. Asset allocation is the key driver of returns in the portfolio, with the fund using a combination of macro-analysis and bottom-up stock selection to drive returns across a number of different asset classes.

While the fund itself is relatively new, the wider Ruffer Investment Strategy it uses has proven itself to be successful for almost three decades. This fund is following in those footsteps: having been launched in September 2021, it has returned 5.3%* and is one of the small percentage of funds to be in positive territory for the 2022 calendar year**.

2. M&G Episode Income

M&G Episode Income aims to produce monthly income and long-term capital growth by investing in a diversified range of assets. The term “episode” refers to those periods of time when investors’ emotions cause them to act irrationally. The fund manager uses behavioural finance to find pockets of value and invest against the herd rather than following it.

It has been run by manager Steven Andrew since November 2010, and in that time the fund has returned 88.3% - more than 30 percentage points more than the sector average***. 40% of the fund is currently invested in equities, 17% of which are in the US while the second largest country allocation is 8.5% in Japan****. 32% is allocated to government bonds and just under 13% to corporate bonds****. There are also allocations to infrastructure and cash.

3. Rathbone Strategic Growth Portfolio 

Manager David Coombs and his team run this multi-asset fund, which is one of the new breed of portfolios that target risk and then look to maximise returns. The team has an outcome-focused approach and complete flexibility investing in actively managed funds and investment trusts, as well as passives and direct equity holdings. The team focuses not only on returns, but also on risk and correlation of assets. 

Sitting in the IA Volatility Managed sector, the fund has returned 88.9% since launch in October 2012 – more than 20 percentage points more than its average peer*****. The largest allocation is currently the 66.7% in equities, and the second largest a 13.6% weighting to conventional government bonds****. Alternative strategies, corporate bonds and commodities make up the remainder of the portfolio****.

4. VT Chelsea Managed Monthly Income

Last but by no means least is our own VT Chelsea Managed Monthly Income fund. Launched in June 2017, it aims to produce monthly income with some capital growth over the long term (5+ years), but with lower volatility than global equities. The fund has a target weighting of between 40% and 60% in UK and overseas equities, although it may also invest in other assets including bonds, property, gold and targeted absolute return strategies. Exposure to assets will typically be via open-ended funds, investment trusts and exchange traded funds.

Since launch, the fund has returned 32.3% compared with a sector average (IA Mixed Investments 20-60% Shares) of 9.3% and is in fact the number one fund in the peer group******. The portfolio is currently split 34.2% equities, 32.8% fixed interest, 12% alternatives and 10% cash with the remainder in targeted absolute return funds, property and gold and silver****. 

*Source: FE fundinfo, total returns in sterling, 1 September 2021 to 13 December 2022
**Source: FE fundinfo, total returns in sterling, 31 December 2021 to 13 December 2022
***Source: FE fundinfo, total returns in sterling, 11 November 2010 to 13 December 2022
****Source: fund factsheet, 31 October 2022
***** Source: FE fundinfo, total returns in sterling, 1 October 2012 to 13 December 2022
****** Source: FE fundinfo, total returns in sterling, 5 June 2017 to 13 December 2022

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and do not constitute financial advice.

Published on 14/12/2022