Funds for a reason, a season and for life

There is a popular poem from an unknown author, which explains three types of friends: friends for a reason, a season, or a lifetime. 

“When someone is in your life for a REASON,” the poem says, “it is usually to meet a need you have expressed. When that purpose is fulfilled, or that need met, the friendship dissipates.” Think someone at the gym who motivates you to work out.

“Then people come into your life for a SEASON,” the poem continues. These friendships last anywhere from a few months to a few years. It could be school friends or mums with small children, sharing their trials, tribulations and moments of joy.

The last category is friends for a lifetime. “...LIFETIME relationships teach you lifetime lessons – things you must build upon in order to have a solid emotional foundation,” the poem concludes. “Your job is to accept the lesson, love the person, and put what you have learned to use in all other relationships and areas of your life.

Funds with different roles to play

When it comes to our investment portfolios, we can use these categories to think about the things we are invested in.

Because while ‘buy and hold’ is often the best strategy, it’s rare that we hold onto a fund for life – we’ll change the portfolio over time, hanging onto some investments longer than others.

We take a look at funds we think you should perhaps consider holdings for a reason or a season today, and those that have the potential to serve you well over a longer period.

A fund for a reason:

Ninety One Global Gold

This is a concentrated fund investing in gold mining companies. It has an excellent track record and has been managed by George Cheveley, a highly experienced commodities expert, since 2015. George began his career at British Steel Strip products in 1990. He later worked at CRU (Commodities Research Unit) and spent three years as a market analyst for BHP Billiton before joining Ninety One.

With central banks around the world having to balance decades high inflation with slowing economies and geopolitical tension, the risk of them making a mistake has been heightened. Gold is often described as a ‘hedge’ against these mistakes and tends to do well at times of extreme market uncertainty, such as we are experiencing today.

A fund for a season:

Man GLG Income

Manager Henry Dixon employs a value investing style to this fund and typically targets three types of stock. The first it where he believes a company is trading below the cost it would take to replace the business today; the second is those with strong balance sheets to allow for dividend growth at double the rate of the market; and the third is where he will look at the entire capital structure of a company to see if there are better opportunities in the debt than the equity.

The largest holdings in this fund currently include several banks and miners – to sectors that are currently benefiting from rising interest rates and rising commodity prices. Dividends in these areas are also strong with mining giant Rio Tinto (a top ten holding*) recently delivering the second largest pay out in FTSE 100 history and Barclays, another top ten holding*, promising shareholders £2.5 billion of capital returns.

A fund for life:

Capital Group New Perspective 

This is the flagship global equities strategy of Capital Group. It has a track record of more than 45 years, investing in some of the world’s largest multinational firms and potential global leaders of the future, that should benefit from transformational changes in the global economy. The fund has a unique multiple manager structure, with each of nine named managers running their ‘sleeve’ in their own way, before blending their best ideas.

Having multiple managers, with a bench of analysts ready to step up, means that the fund avoids key person risk. As such, it gives the strategy longevity as demonstrated by the >45-year track record. For those looking for large cap global growth exposure with active management, but without having to worry about manager change or style drift over the medium or long-term, this is a compelling option.

*Source: fund factsheet, 31 January 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.