Specialist funds: the answer to current investment limbo?

If we’re completely honest it’s not the clearest of pictures out there for investors as a general election looms, Brexit is still unresolved and trade wars rage.

Investors are worried, and who can blame them? Only recently, the IMF warned that the global economy is growing at its slowest pace since the global financial crisis at just 3%* this year – down from its July forecast of 3.2%* and a sharp slowdown from just two years ago. It added that developed economies would only grow at 1.7%* in 2019. The figures for 2020 do not look much better.

The result has been an overwhelming urge to diversify portfolios to counteract all of these uncertainties. Earlier in the year it was all about using global equities to get this diversification. However, as geopolitical concerns persist, investors have begun to take this a step further by investing in multi-asset strategies.

How can investors look for returns beyond the core of their portfolios?

The scenario for global markets is unlikely to change soon. The fact is, the market is a bit of a minefield, so investors have every right be cautious with the core of their portfolio.

However, the satellite element of the portfolio could take advantage of opportunities. As the name suggests, satellite holdings tend to be a much smaller allocation of your portfolio, but have the potential to add additional returns without putting your core at risk. Below are four specialist vehicles from the Chelsea Selection that investors may consider for this part of their portfolio.

Aberdeen Standard Investments Latin American Equity

This fund is run on a day-to-day basis by Aberdeen’s emerging markets team, headed by Devan Kaloo. The team look to identify and build large positions in high quality firms, trading at reasonable valuations. The team make four to five company visits before an investment is made – but will typically hold a company for five years. The fund has the majority of its investments in Brazil (64.4%) and Mexico (21.8%)**.

AXA Framlington Global Technology

This fund invests in technology companies of all sizes across the globe. Manager Jeremy Gleeson has run it since 2007 but has specialised in the technology sector since 1998. He looks for companies with progressive-thinking management, dominant positions, above-market growth and sustainable or improving profitability.

VT Gravis Infrastructure Income

VT Gravis UK Infrastructure Income invests mainly in investment trusts exposed to different types of UK infrastructure; from railways and roads to GP surgeries and solar power. It has an income target of 5% per annum, which is distributed quarterly, and offers exposure a less volatile and higher-yielding area of the UK economy.

Merian Gold & Silver

Managed by Ned Naylor-Leyland, this fund invests in both physical gold and silver bullion, as well as gold and silver mining companies. Ned will dynamically move the portfolio between bullion and miners depending on his macroeconomic view and valuations. In a more defensive scenario, the fund will own more bullion and more gold. In a more optimistic scenario the fund will have a much greater weight to miners and silver.

*Source: International Monetary Fund figures, October 2019
**Source: fund factsheet, 30 September 2019

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. Darius's views are his own and do not constitute financial advice.

Published on 06/11/2019