Interactive Investor

Rated Funds 2014: Seven higher-risk mixed-asset funds

9th April 2014 08:59

Helen Pridham from interactive investor

Asset allocation is important for most investors, with the ideal portfolio consisting of a mixture or assets such as shares, bonds, property and cash. This way, you can gain exposure to investments that can perform well in different market conditions.

Perhaps the easiest way to gain this exposure is by buying into one-stop shop fund and trusts, that invest in a variety of mixed assets. The range and variety of mixed-asset funds has increased significantly in recent years and they can be used to provide regular income as well as smoother growth.

In our rated mixed-asset funds, we have two different categories, lower risk and higher risk. Below, in the higher-risk category, we have listed funds that lie in the 40-85% shares and flexible investment sectors.

To see the full list of Money Observer Rated Funds, click here.

Artemis Strategic Assets

The Artemis Strategic Assets fund appears in two of Money Observer's medium-risk growth portfolios. It aims to provide longer-term positive returns under most market conditions, outperforming both cash and equities over rolling three-year periods.The manager, William Littlewood, seeks to achieve this goal by preserving capital when markets are poor and making money through active asset allocation when conditions are favourable. Shares are the mainstay of the fund, but Littlewood moves between a high and a low-equity content, depending on circumstances. He can also invest in bonds, commodities and currencies and use derivatives.

CF Ruffer Equity & General

The CF Ruffer Equity & General fund is in our current Premier League. It has been managed by Alex Grispos since 2007. Although we have classed it as higher risk since it is invested primarily in equities, Grispos says his concerns are as much about trying to avoid losing money as about growing the capital.The portfolio consists of a mixture of global equities and cash. The equity element combines a few large holdings in "safe" companies with a broad base of small holdings in riskier businesses.

Fidelity Moneybuilder Balanced

Fidelity Moneybuilder Balanced is included in one of Money Observer's model growth portfolios, although it is actually aimed at investors seeking income. However, we think this fund, like other income-oriented funds, can also be useful for growth investors who want to take a relatively cautious approach. Investors who do not require income can opt to have it reinvested.

The fund has a separate equity and bond portfolio, fixed at 65% and 35% of the total portfolio respectively. Michael Clark is responsible for the equity portfolio, and Ian Spreadbury for the bonds. Both men are cautious by nature and the volatility of the fund is relatively low versus its peer group.

Personal Assets IT

The Personal Assets Investment Trust is an Editor's Selection. It is a self-managed investment trust and the investment adviser is the highly regarded Sebastian Lyon of Troy Asset Management, who took over from the trust's founder, Ian Rushbrook, in 2009. Lyon's strategy is dictated by the trust's objective of capital preservation, with capital growth as a secondary consideration.This means that it often underperforms when markets are rising because of its defensive stance. It currently has four main investment "pillars" - blue-chip equities, index-linked bonds, gold bullion (including gold-mining shares) and cash. Equities are currently just over 40% of the portfolio, but they have been as high as 80%.

Practical

Practical has won a Money Observer best mixed asset (higher risk) award for two consecutive years and is also in our Premier League.It was one of the UK's first unit trusts and it is still run by the founder's grandson, Sean Ashfield. Its aim has also stayed the same - to provide investors with above-average capital growth and income, through holding mainly a wide spread of investment trust shares but also other financial securities, including bonds, shares, unit trusts and cash.When selecting investment trusts, Ashfield looks for sound long-term performance, a satisfactory discount to net asset value and income growth potential. Its parent company is itself an investment trust - London & St Lawrence.

RIT Capital Partners IT

RIT Capital Partners is another Editor's Selection. A major attraction of this investment trust is the active involvement of Lord Rothschild, who is the chairman of the board and still attends the weekly investment meetings. It has a good long-term performance record but has lagged over the short term.However, we are optimistic it is going to do well again following the appointment in late 2012 of Ron Tabbouche as investment director. He has made the portfolio more concentrated. The five themes he has been focusing on recently are technology, Japan, emerging markets, uncorrelated fixed interest, and the trust's holdings in highly regarded external active managers' funds.

Ruffer Investment Company

Ruffer Investment Company is also an Editor's Selection. Established in 2004, it was one of the first to have an absolute return objective. Although the original manager Jonathan Ruffer has now stepped back, his successors Hamish Baillie and Steve Russell follow the same philosophy.They adhere to the approach that the firm uses for its private clients, with capital preservation the top priority. Their principal objective is to achieve a positive total annual return of at least twice Bank of England base rate. Around half the portfolio is currently invested in equities, with the rest in index-linked bonds and gold.

To find out the methodology behind Money Observer's Rated Funds, read: How 2014's Rated Funds were chosen.