Four innovative funds to diversify your investment portfolio

When it comes to our investments, most of us start off with a ‘core’ – the assets or funds at the centre of our portfolio that will form the mainstay of our savings.

For some, this core is a multi-asset fund – a fund that, as the name suggests, invests in lots of different assets and has a manager that does all the work for you. Others like to build their own core – often including things like UK and global equities and bonds.

As our portfolios grow or we become more confident as investors, we may start to branch out by adding satellite or specialist investments. There are no strict guidelines for what these satellite investments should include—it varies based on the investor’s needs, interests, and goals. Some may seek an additional income stream, while others are drawn to investments that spark their curiosity.

If you’re looking to add a few specialist funds to enhance your portfolio but need some inspiration, you’re in luck. Here are four portfolios featuring innovative companies poised to benefit from current trends.

Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and tax rules can change. Chelsea does not offer advice and so if you are unsure of anything please contact an expert adviser.

Sanlam Global Artificial Intelligence

Few sectors have captured as much attention in the past year as artificial intelligence (AI), and it’s widely expected to remain a dominant trend in the future. Many of us are already engaging with AI, as major tech companies like Microsoft integrate it into their products. Others may be familiar with tools like ChatGPT, the virtual assistant that has been helping draft documents for the past couple of years.

The Sanlam Global Artificial Intelligence fund aims to capitalise on AI’s rapid growth by investing in companies directly involved in AI's key activities. Interestingly, the fund also uses an AI system itself to help pick companies whose business models are expected to benefit from this growing theme over the coming years.

Current holdings in the fund include Nvidia, Microsoft, Amazon, Alphabet and Netflix*. In his latest commentary, fund manager Chris Ford noted that advancements in AI are dramatically expanding the technology’s capabilities. “While the precise impact on productivity is yet to be quantified, early signs indicate that AI is indeed transformational,” he wrote.

WS Amati Strategic Metals

This fund invests broadly in base metals and is well-suited for those looking to support the transition to clean, sustainable energy sources. Managed by the experienced duo of Georges Lequime and Mark Smith, the fund seeks long-term capital growth through a diversified portfolio of globally listed metals and mining companies.

The managers anticipate that demand for these metals will be driven by global population growth, the shift to sustainable energy, infrastructure projects, the rise of hydrogen fuel cells, and the increasing adoption of electric vehicles.

Pan American Silver Corp, Fresnillo, K92 Mining, and Liberty Gold are among the fund’s largest current holdings**, and the managers believe the mining sector is on the road to recovery. They wrote: “Precious metals continue to be our preferred sector for now with high gold and silver prices persisting and looking to move higher, which should lead to very strong financial results for the companies over the course of the year.”

Schroder Digital Infrastructure

We have already mentioned the AI explosion but another important theme is improving internet access around the world as this is so important for our future development. That’s the aim of the Schroder Digital Infrastructure fund, which targets companies involved in areas such as the 5G rollout, fibre optic connectivity and data centres.

Schroders highlights that the push for digitisation from both businesses and governments creates investment opportunities in both developed and emerging markets. The fund invests in companies with significant potential to benefit from the worldwide push for improved internet access.
Given the insatiable global demand for data, the need for more digital infrastructure is undeniable, making the fund’s strategy highly compelling.

The fund’s investment universe spans around 300 stocks and REITs (Real Estate Investment Trusts), with a wide range of intriguing holdings. Fundamental research is conducted to identify the strongest businesses for the portfolio, while ESG (environmental, social, and governance) factors are also considered. The fund's largest holding is American Tower, a global leader in wireless infrastructure, representing 6.6% of its assets under management*.

Jupiter Financial Opportunities

Our final contender is a fund that invests in innovative financial services firms operating in either developed or emerging markets. This means it will have exposure to a wide array of subsectors, including banks, insurers, stock exchanges and even online payment companies.

Managed by the experienced Guy de Blonay, the fund aims to deliver long-term capital growth, with a minimum investment horizon of five years. The financial sector can be notoriously complex to analyse, which is why many generalist managers tend to avoid it. However, Guy’s expertise in this area stands out, and we appreciate his flexible approach to portfolio construction, increasing his conviction when promising opportunities arise.

His strategy combines economic insights with detailed analysis of individual companies, while also focusing on key themes like digitalisation, payment solutions, and data analytics. The fund’s largest holding is in Tokio Marine Holdings**, a multinational insurance company based in Japan. Other notable positions include private equity firm Intermediate Capital Group and UniCredit**, a pan-European commercial bank headquartered in Milan, Italy.

*Source: fund factsheet, July 2024
**Source: fund factsheet, June 2024

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 fund managers and do not constitute financial advice.