Bond, property and multi-asset tips for 2020

by Kyle Caldwell from Money Observer |

We outline a wealth of bond and property investment ideas as well as some multi-asset fund suggestions.

Property

Custodian REIT

SPTR 1 year 4.4%, 3 years 25.4%, yield 6.4%

Custodian REIT (LSE:CREI) invests in UK commercial real estate for an attractive and rising income plus the potential for capital gains. Tim Cockerill says:

“The portfolio is well-diversified, with a large number of properties and tenants. The units are small in size, so the manager invests in a part of the market that large property vehicles won’t cover, making it more flexible. The yield is attractive, despite the shares’ premium rating.”

Secure Income REIT

SPTR 1 year 14.2%, 3 years 51%, yield 4.1%

Secure Income REIT (LSE:SIR) seeks to provide shareholders with a secure and growing income from geared exposure to high-quality property let to financially strong tenants in the healthcare and leisure sectors. The weighted average unexpired term of its leases is more than 21 years, and most have upwards-only RPI-linked rent reviews. Its small premium rating, currently at 3%, reflects its exceptionally strong three-year total returns. Peter Hewitt says:

“It is a very safe property firm, with good dividend growth prospects.”

Fixed income

Vanguard Global Bond Index

TR 1 year 8.3%, 3 years 9.3%, yield 1.8%

Vanguard Global Bond Index is a highly diversified tracker with exposure to 11,703 global bonds. It is cheap too: its ongoing charges figure is 0.15%. For almost a decade various commentators have tried to call the end of the 35-year bull market for bonds, but bonds should not be discounted as diversifiers. John Husselbee says:

“With little dispersion in returns between government bond markets, we prefer to own a cheap passive product for bond exposure.”

A Money Observer Rated Fund 2020

M&G Global Macro Bond

TR 1 year 6.5%, 3 years 6.5%, yield 2.5%

The future path for bonds is unclear, says Brian Dennehy. “But if we had to entrust our money to anyone, it would be M&G’s Jim Leaviss and the M&G Global Macro Bond.” The fund invests across currencies, government and corporate bonds, and developed and emerging markets. Given the unpredictability in bond markets, he likes the fund’s flexible approach and ability to move around the globe to exploit opportunities.

A Money Observer Rated Fund 2020

Liontrust Strategic Bond

TR 1 year 7.7%, 3 years n/a*, yield 2.4%

Liontrust Strategic Bond is tipped for the second year on the spin, owing to its experienced management team. Kelly Prior says: "Using income and capital growth, [Liontrust’s] experienced team has designed a truly strategic fund to give something of a traditional bond fund return in a market that has become hooked on extreme expectations. Driven by the macro views of Dave Roberts at the helm, supplemented by the bottom-up analysis of Donald Philips and with Phil Milburn sitting somewhere in the middle, the team scours multiple asset classes and markets to achieve outperformance."

Multi-asset

Royal London Sustainable Diversified

TR 1 year 17.5%, 3 years 36.5%, yield 1.5%

Royal London Sustainable Diversified invests in growing, innovative firms that have a positive impact on society. Manager Mike Fox manages a mixed-asset portfolio that scores highly in terms of risk-adjusted returns over the past three years. He focuses on long-term themes and trends such as infrastructure and changing demographics. The fund would suit investors looking for balanced exposure to equities and bonds via a sustainability focus. Dennehy describes it as “one of most consistent multi-asset funds around”.

A Money Observer Rated Fund 2020

RIT Capital Partners IT

SPTR 1 year 9.7%, 3 years 26.3%, yield 1.8%

RIT Capital Partners (LSE:RCP) places a high priority on capital preservation. Its safety-first approach seems to be something investors are prepared
to pay well for, as the trust is trading on a premium of 12%. The trust invests globally in equities, private equity, bonds and hedge funds, with an actively managed currency overlay. Its approach means it shines in downturns but lags in upturns. Tim Cockerill says:

“It is an ideal long-term core holding, but wait for the double-digit premium to fall before buying.”

Troy Trojan

TR 1 year 7.3%, 3 years 12.1%, yield 0.7%

Troy Trojan’s respected fund manager Sebastian Lyon invests in global shares, government bonds and gold. Ben Yearsley says: “The manager takes a cautious approach, with real preservation of capital (taking account of inflation) an important facet.” Victoria Hasler adds:

“The manager has positioned the fund conservatively for a number of years now, as he believes the valuations of many assets remain at extreme levels.”

Note: (SP)TR = (share price) total return. All performance data Morningstar, as at 1 December 2019. *Insufficient track record.

Our fund and trust tips panellists

Our fund experts:

Ben Yearsley is a director at Shore Financial Planning. He formerly worked at Charles Stanley Direct and Hargreaves Lansdown.

Kelly Prior is an investment manager in BMO Global Asset Management’s multi-manager team, which is headed up by Rob Burdett and Gary Potter.

Mick Gilligan joined Killik & Co in 2001 and became a partner in 2004. He specialises in fund research.

John Husselbee is head of the Liontrust multi-asset team. He has more than 25 years’ experience in managing multi-asset portfolios.

Brian Dennehy is managing director at advisory firm Dennehy Weller. He also runs FundExpert, which provides research and insights for self-directed investors.

Victoria Hasler is head of research at Square Mile. Before joining Square Mile, Victoria worked for a Brewin Dolphin as a fund analyst.

Our trust experts:

Tim Cockerill is investment director at wealth manager Rowan Dartington, which is part of St James’s Place. 

John Newlands was head of investment companies research at Brewin Dolphin. He now runs Newlands Fund Research.

Peter Hewitt has managed the BMO (formerly F&C) Portfolio trusts since 2008. He joined F&C in 1999.

Charles MacDonald is a partner at Rossie House Investment Management, which favours trusts for private client portfolios.

Philippa Maffioli joined Blyth-Richmond Investment Managers in 2001. She works with her father, who founded the business.

This article was originally published in our sister magazine Money Observer. Click here to subscribe.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.  

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