Tom Biggar, Head of Investments at TQ Invest said:
"There is a strong view that we will have another sideways moving market in 2012 with continued volatility similar to that seen this year. Despite all this there are spotlight funds which stand out as having the potential to beat the market next year and could be worth investors considering.
The New Year is the obvious time to review investment holdings and reposition portfolios, each of these funds offers the potential for long term growth and income prospects.
Dull, defensive and boring appears to be the new vogue for investors and I believe we will need more of the same attitude next year. Funds that control their risk and show an emphasis to preserving capital on the downside will remain popular. There is a growing demand for income and in a year where capital growth forecasts are pessimistic, total returns from income and growth are the order of the day."
The value of investments and the income from them can go down as well as up. Past performance should not be regarded as a guide to the future. The investments described may not be suitable for all recipients and this content does not constitute personalised investment advice.
TQ Invest's ten fund predictions:
Strategic Bond sector - M&G Optimal Income - Richard Woolnough is a veteran manager who is capable of steering his fund through difficult market conditions. His fund tends to outperform peers in down markets. Recent good investment calls has ensured the fund remains firmly in the top quartile and the fund is currently positioned conservatively due to its backing of strong corporate and high yield bonds as well as government bonds that have been held during the Eurozone crisis. A current yield of 5.1% means this is an attractive pick for the income investor.
Global Bond sector - Old Mutual Global Strategic Bond - Stewart Cowley is another veteran of the fixed interest world. He has increased his holdings in corporate debt recently however he remains negative in his outlook for Europe and the US and remains positioned for further tightening. Above average performance in every one of the last 5 years and very strong performance over the last 6 months during the Eurozone crisis suggests that if you think the situation will get worse before it gets better, then this could be the fund for you.
UK All Companies sector - JOHCM UK Opportunities - A manager with over 10 years investment management experience, John Wood believes the potential of equities is much more attractive than that of heavily indebted government bonds. He tends not to get sucked in by the latest investment fads but rather focuses on companies that generate large amounts of cash that can withstand the test of time. He is a manager to back in times of uncertainty but tends to fall behind the pack a little when growth is strong.
UK Equity Income sector - Invesco Perpetual High Income - There can only be one obvious choice in the current market conditions and that is Neil Woodford. The investment legend has won many plaudits with his low turnover portfolio (his average stock holding is 10 years) and he is one of the last bastions of true long term investing. No 1 in his sector this year, he is someone to turn to when conditions get tough but is another that can lag behind in strong bull markets. That said this is the fund to hold for 10 years plus. He's a consistent performer who produces a competitive yield (currently 3.9%).
European sector - Neptune European Opportunities - Rising star Rob Burnett is not afraid to make big changes to his fund in line with his changing view on the macro economy. He made a big move into financials at the beginning of the year but a sharp about turn was made a few weeks later and he continues to remain defensive. Perhaps the most unpopular equity sector at the moment could produce the most opportunities next year? Above average performance in each of the last 5 years and a tight risk control makes this fund one of the top pick's in its sector.
North American sector - Threadneedle American Select - Cormac Weldon has run the fund for 10 years and has produced above average performance in 3 of the last 5 years. Another sector that is relatively unloved, north american equities are in reassuringly good shape despite the macro economic backdrop. The fund is supported by a large team and follows strict risk controls when picking stocks using its top down thematic framework, which gives it good grounding for strong future performance.
Global sector - Newton Global Higher Income - James Harries manages the fund and has consistently outperformed his peers since launch. His ability to limit the downside on the portfolio has ensured top quartile performance in difficult years. The yield on the fund is currently 5.0% and this demonstrates the defensive characteristics within the portfolio. The growing popularity for investors seeking income away from the traditional income haven of the UK has seen this fund swell to over £2bn in size.
Asia Pacific sector - Newton Asian Income - Jason Pidcock manages another fund from the Newton stable which are proving to be real thoroughbreds when it comes to global, equity and income. This fund has produced above average performance in 4 of the last 5 calendar years and currently yields 5.6%. Another feature of its defensive characteristics is its low volatility compared to its sector counterparts. With volatility forecast to remain high in Asia Pacific markets, this fund is a worthy consideration for income and growth investors.
Emerging Markets sector - First State Global Emerging Markets Leaders - The manager, Jonathan Asante, looks to avoid hiccups by not investing in state run firms which are less transparent but prefers companies run by people with a strong history of aligning themselves with share holder interests. His cautious approach sees strong protection on the downside and has resulted in top quartile performance over each of the last two years. If you want to invest in a more cautious Emerging Markets fund then this fund offers the right credentials.
Multi Manager sector - Cazenove Multi Manager Diversity - Marcus Brookes and Robin McDonald have done a great job at controlling the volatility of the fund and have produced top quartile performance this year. Their highly researched process benefits from a combination of asset allocation and fund selection expertise which offers diversification and access to the best specialist fund managers. It combines growth, value and business cycle management styles and the team have produced an enviable and respected track record that positions them strongly for next year.
|
