Adrian Lowcock, Head of Personal Investing at investment platform Willis Owen says:
It can be easy to chop and change funds, especially around ISA season, with some of your outlier funds at risk of not making the cut for the coming year.
Maybe they’ve had a period of underperformance, or maybe another fund has caught your eye after delivering better returns.
However, there are some funds that you should hold on to through thick and thin, thanks to the strength of their investment process and their returns over the longer term.
Below are three funds which can be investors’ long-term partners, rather than just a short-term fling.
Threadneedle UK Equity Income
Richard Colwell is an experienced equity income manager and has been responsible for this fund since 2010. His focus is on stock selection, and Colwell holds a blend of high quality companies with high returns and strong cash generation as he believes these can fund their own growth. He combines quality companies with out-of-favour businesses that have some recovery potential. This means he has some businesses which may not currently pay a dividend, but which have the potential to grow the income and value of the business in the future. The fund is unconstrained but is predominantly invested in large blue chip companies, although Colwell will take significant sector bets against the index to match his thematic views.
The largest position in the fund is Pharmaceuticals giant Astrazeneca. Colwell believes the company is well positioned to grow its dividend because of its pipeline of new, higher margin, products. The manager is also positive on the Industrials and Consumer Services sectors, which combined account for nearly half of the fund’s total investments. Electrocomponents and Rentokil Initial, for example, both feature in the fund’s top five holdings.
Fidelity Global Dividend
This is a core global income fund, which invests in companies offering a healthy and sustainable yield. Dan Roberts has managed this fund since its launch in 2012, with support from Fidelity’s extensive research teams. Roberts considers himself a value investor and focuses on companies that can offer a good degree of capital protection during market downturns. This means the fund may lag in strong bull markets. Careful analysis of potential companies allows Roberts to identify those with stable finances and strong cashflow.
The portfolio currently favours Pharmaceuticals and his largest company position is the Swiss giant Roche. The fund’s largest country exposure is the US, with holding there including US Bancorp, followed closely by the UK where the fund has exposure to both Relx and Unilever.
Merian UK Smaller Companies
Merian have one of the most highly regarded small and mid-cap teams, headed by Dan Nickols who is the manager of this fund. He looks for companies that demonstrate at least one of the following characteristics: the ability to grow earnings faster than the market average for an extended period of time; the scope to generate a positive surprise; or the potential to be re-rated relative to the market. Nickols will also pay attention to what is going on in the economy and uses his experience to judge how this filters down to company performance. He is also willing to hold onto his winners as they grow into larger companies.
The detailed analysis the team conducts has led to conviction in investments such as the online retailer Boohoo, which had a strong Christmas period. Other holdings include the fund manager Liontrust Asset Management and the mortgage lender OneSavings Bank.
Notes to Editors
Willis Owen is one of the UK’s leading online investment service providers. Founded more than 20 years ago Willis Owen now has around £1bn of funds under management and has acted as an intermediary for over 150,000 customers and hundreds of millions of pounds worth of investments,
Willis Owen Limited is authorised and regulated by the Financial Conduct Authority.