Tele­graph 25: how our fund picks have fared

The Daily Telegraph - Your Money - - YOUR MONEY -

A lot has hap­pened since we first tipped our 25 favourite funds in Jan­uary 2016. James Con­ning­ton re­ports

pe­ri­ods in the past be­fore prov­ing doubters wrong. How­ever, we will watch closely in case prob­lems per­sist.

Re­turn since Jan 30 2016: 46pc Sec­tor av­er­age re­turn: 43pc For UK-based in­vestors, the pound’s fall has sig­nif­i­cantly boosted the re­turns from in­ter­na­tional in­vest­ments. This, com­bined with sur­pris­ing global mar­ket ral­lies, has meant huge re­turns from L&G’s FTSE World tracker fund.

Re­turn since Jan 30 2016: 71pc Sec­tor/in­dex re­turn: 49pc/45pc It has been a big year for James An­der­son’s in­vest­ment trust, which has now en­tered the FTSE 100. Its large hold­ings in top growth stocks such as Ama­zon, Tesla, Alibaba and Google, plus the boost from the pound, have led to as­ton­ish­ing per­for­mance.

Re­turn since Jan 30 2016: 49pc Sec­tor/in­dex re­turn: 43pc/45pc There have been con­cerns that the ben­e­fited from the US mar­ket rally fol­low­ing Don­ald Trump’s elec­tion and the ef­fects of the weak pound.

This ex­change-traded fund still pro­vides one of the cheap­est ways to buy into the US mar­ket, where our pref­er­ence re­mains in favour of “pas­sive” in­vest­ing.

Re­turn since Jan 30 2016: 45pc Sec­tor/in­dex re­turn: 43pc/41pc The pound’s weak­ness against the yen ac­counts for half of the fund’s re­turn. In lo­cal cur­rency terms, it has gained 20pc, com­pared with 15pc for the in­dex. The man­agers are clear that their fund is fully ex­posed to cur­rency move­ments. Their “value” ap­proach to in­vest­ing in Ja­pan could ben­e­fit from global in­ter­est rates rises. Re­turn since Jan 30 2016: 26pc Sec­tor av­er­age re­turn: 26pc Our rec­om­men­da­tion ap­plies to the range of five “LifeS­trat­egy funds”, de­pend­ing on which suits best. For per­for­mance pur­poses we have looked at the most pop­u­lar op­tion, 60pc shares/40pc bonds. It has matched the re­turn of the av­er­age “mixed in­vest­ment, 40pc to 85pc shares” fund over the pe­riod. Van­guard cut the fee on the range from 0.24pc to 0.22pc in Jan­uary.

Re­turn since Jan 30 2016: 9pc Sec­tor av­er­age re­turn: 19pc There are multiple funds in Schroder’s MM Diver­sity range, but we have fo­cused on the main MM Diver­sity port­fo­lio. It sits in the “mixed 20pc to 60pc shares” sec­tor, which it has lagged. How­ever, the fund is around 30pc in­vested in shares and has 25pc in cash, so would not be ex­pected to beat funds with 50pc or 60pc in shares. Its aim is to stay ahead of in­fla­tion, and

it has.

Re­turn since Jan 30 2016: 57pc In­dex re­turn: 47pc In­dia has been volatile but prof­itable for in­vestors over the past two years, and there is a clear ad­van­tage to in­vest­ing via a top stock picker. This fund’s man­ager, Av­inash Vazi­rani, has nearly tripled the in­dex’s re­turn since 2008, when he be­gan run­ning the fund. Ster­ling weak­ness has had a sig­nif­i­cant im­pact. In In­dian ru­pees, the fund has re­turned 35pc, com­pared with 28pc for the in­dex since we picked it. Re­turn since Jan 30 2016: 32pc Sec­tor/in­dex re­turn: 39pc/31pc This sec­tor has also of­fered a bumpy but prof­itable ride in re­cent years. While over 10 or 15 years the trust has beaten the Nas­daq Biotech­nol­ogy in­dex, in re­cent years it has fol­lowed it very closely. This in­dex can be tracked for a sig­nif­i­cantly lower 0.47pc an­nual charge via the iShares Nas­daq Biotech­nol­ogy ETF. As a re­sult, we may rec­om­mend a switch when we next come to over­haul our choices. Re­turn since Jan 30 2016: 41pc Sec­tor re­turn: 37pc This “smart tracker” fund tracks com­pa­nies from a global in­dex that have grown div­i­dends for at least 10 years and can sup­port fu­ture pay­ments. It has beaten the av­er­age global equity in­come fund, for a charge of just 0.45pc a year.

‘Ster­ling weak­ness has boosted re­turns from in­ter­na­tion­ally fo­cused funds’

Ama­zon is one of the big­gest hold­ings of the Scot­tish Mort­gage trust. In­set, Jeremy Lang runs Arde­vora’s UK In­come fund

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