CAUTIOUS OPTION

Anna Bowes, investments manager at AWD Chase de Vere, suggests a broadly based portfolio for cautious investors. The Standard Life Dynamic Distribution Fund is ranked 11th out of 91 funds in the Cautious Managed sector over one year to 28 September 2007. Over the period, it has returned 4.16 per cent, compared to a sector average of minus 0.09 per cent.

‘Launched in February 2006, the fund aims to achieve a total return from income and capital appreciation by investing in varying combinations of equities, bonds and property mainly through Standard Life’s own fund range. Fund manager Jacqueline Kerr is investment director of Standard Life. With her background in asset allocation, Kerr is well placed to manage the fund, calling the asset allocation from a top-down perspective. To diversify risk and capitalise on opportunity, she can take positions globally.

‘The fund is predominantly invested in value-oriented large-cap UK equities. The allocation to equities sits at just under 42 per cent, property at 30 per cent, UK fixed interest around 19 per cent and cash at about nine per cent. Investors should take comfort that the majority of the fund is going to be dominated by familiar names. Non sterling-based securities are hedged back to sterling.’

The fund has an initial charge of four per cent and an annual management fee of 1.5 per cent.

Contact: Standard Life Investments
Tel: 0131 225 2345 or visit www.standardlifeinvestments.com

BALANCED OPTION

Tim Cockerill, head of research at Rowan & Co, suggests a fund with a well-diversified portfolio. F&C UK Growth & Income is ranked fifth out of 75 funds in the UK Equity Income sector over three years to 28 September 2007. Over the period, it has returned 59.01 per cent, compared to a sector average of 46.02per cent.

‘The F&C UK Growth and Income fund provides investors with a flexible mandate that ranges across the whole market spectrum, with one of the best-performing managers in the UK. It has, at its helm, one of the UK’s most experienced managers,

Ted Scott. However, Scott has a co-manager, Hilary Aldridge, who specialises in medium and small companies, while he covers large-cap stocks. The fund’s investment process is based on the very successful structure Scott has used to manage the F&C Stewardship Income fund. This is a ‘bar-bell’ process in which part of the portfolio is dedicated to producing the bulk of the income for the fund and this tends to be dominated by larger-cap stocks.

‘FTSE 100 stocks are bought on the criteria of relative valuation, strategic opportunity and yield, while the small-cap stocks held are because they are believed to be undervalued and have competent managers. Approximately 80 per cent of the fund is invested for the long term and 20 per cent is traded, which gives the fund great flexibility.’

F&C UK Growth & Income has an initial charge of five per cent and an annual management fee of 1.25 per cent.

Contact: F&C Fund Management
Tel: 020 7628 8000 or visit www.fandc.com

AGGRESSIVE OPTION

John Monaghan, discretionary investment manager at Origen suggests Artemis Strategic Bond as an unusual choice. It is ranked 25th out of funds in the UK Other Bond sector over one year to 28 September 2007. Over the period, it has returned minus 2.86 per cent, compared to a sector average of minus 2.83 per cent.

‘For investors who wish to “outsource” their asset allocation within the bond markets, this fund may be worthy of closer inspection. Launched in June 2005, the main focus of its managers is on bonds issued in the UK and Europe, although they may consider US and emerging markets issues if appropriate. With the ability to expose the fund to an increased range of bond issuance, its managers, James Foster and Alex Ralph, use this flexibility to diversify portfolio risk by ensuring that there is a spread across the various asset sub-classes, which all have different influences at each stage of the economic cycle.

‘The focus is on total return and not the level of yield. The investment approach combines both top-down macroeconomic factors with bottom-up credit specific issues. The portfolio seeks to add value across the entire bond spectrum, but will not go beyond 55 per cent in high yield, with a minimum allocation of 20 per cent. They also have the ability to go up to 50 to 60 per cent in government bonds .’

Artemis Strategic Bond has an initial charge of 5.25 per cent and an annual management fee of one per cent.

Contact: Artemis Fund Managers
Tel: 0800 092 2051 or visit www.artemisonline.co.uk
This article is from the November 2007 issue of What Investment.