CAUTIOUS OPTION
Dan Kemp, fund manager at Saltus Partners LLP, highlights the attractions of an actively managed bond fund. Artemis Strategic Bond is ranked 23rd out of 52 funds in the IMA UK Other Bond sector over one year to 30 April 2008. Over the period, it has returned -7.49 per cent, compared with a sector average of -7.85 per cent.

‘We see phenomenal value in credit spreads at the moment, by which we mean the extra income you get from holding a corporate bond as opposed to a government bond. Corporate bonds were hit very hard by the credit crunch, but now there is a fantastic opportunity to capture the benefits of the re rating of the corporate bond sector as the market recovers.’

He adds, ‘The managers of Artemis Strategic Bond, James Foster and Alex Ralph, have a great deal of experience in the corporate bond market and this is an area where experience matters. Foster in particular is renowned as being very good at tactical asset allocation. The big risk for bond investors is that as inflation rises so government bond yields will rise, so offsetting much of the effect of the recovery in corporate bonds.

However, this fund will have the opportunity to manage its government bond exposure. So it is in the right area of the market, with the right approach and the right managers.’
Artemis Strategic Bond has an initial charge of 5.25 per cent and an annual management fee of 1.0 per cent.

BALANCED OPTION
James Davies, investment research manager at the Chartwell Group, opts for a well-established global growth portfolio as a balanced option. Artemis Global Growth is ranked fifth out of 129 funds in the IMA Global Growth sector over three years to 30 April 2008. Over the period, it has returned 68.78 per cent, compared with a sector average of 38.49 per cent.

‘The objective of the Fund is to achieve long-term capital growth from a diversified portfolio investing in any economic sector in any part of the world. Manager Peter Saacke actively manages the portfolio and will not be restricted in respect of choice of investments by company size, industry or the geographical split of the portfolio. As well as his own stock selection skills, Saacke uses Artemis’s SmartGARP screening to identify mispriced stocks; it works particularly well for the global sector, where the sheer number of stocks requires a disciplined approach.

‘In essence, what investors in this fund get is a diversified and actively managed portfolio of global equities. With increased globalisation, confining your investments to just one or two developed markets limits your ability to take advantage of exciting opportunities elsewhere. Currently, for example, the fund has a 5.0 per cent weighting to Latin America, with 17.4 per cent in Asia Pacific.’

Artemis Global Growth has an initial charge of 5.25 per cent and an annual management fee of 1.5 per cent.

AGGRESSIVE OPTION
Mick Gilligan, director of fund research at Killik & Co, points more aggressive investors in the direction of one of the funds benefiting from global economic development. M&G Global Basics is ranked first out of 129 funds in the IMA Global Growth sector over three years to 30 April 2008. Over the period, it has returned 97.90 per cent, compared with a sector average of 38.49 per cent.

‘This fund offers a means of accessing an emerging market growth theme, primarily through the equity of Western companies, with an experienced manager who has demonstrated strong foresight over the years, Graham French. He has a long-term contrarian investment philosophy and seeks to avoid reacting to short-term movements and market “noise”. He looks for fundamentally undervalued companies, with a focus on higher-quality established businesses capable of generating consistently strong margins throughout economic cycles.’

He adds ‘He is very much in the right space at the moment and has a knack of being ahead of the game. The portfolio continues to move in a “glacial” manner, with relatively few wholesale changes from one month to the next. Its investment thesis remains based on the manager’s belief that new consumers, primarily based in emerging economies, will demand increasingly sophisticated goods and services as their economies develop.’

M&G Global Basics has an initial charge of 4.0 per cent and an annual management fee of 1.50 per cent.