Four cautious fund buys as stocks rebound

Saltydog Investor is deploying its giant cash pile but is still cautious on where markets are heading.

Although there is a war in Ukraine, record levels of inflation all over the world, and rising interest rates, most investment sectors made gains in March. This is a significant improvement on the previous month when nearly all of them fell.

But there were a few sectors that made gains in February. UK Direct Property went up by 0.65%, North American Smaller Companies made 1.08% and Japanese Smaller Companies rose by 1.99%. The best-performing sector was Latin America, which went up by 3.84%.

Last month, Latin America was still the best sector, rising by more than 14%.

Past performance is not a guide to future performance.

As well as providing fund and sector analysis every week, Saltydog Investor also runs a couple of demonstration portfolios showing what we are doing with our own money. They are both relatively cautious and we consider minimising our losses in adverse conditions as important as making gains when things are going well.

Therefore, it makes sense that for most of this year both portfolios have been predominantly in cash. At the beginning of March, the cash level in our Tugboat portfolio was 90%, and in the slightly more adventurous Ocean Liner it was 70%. During the month we have made a few investments bringing the cash level down to about 70% in the Tugboat and just under 50% in the Ocean Liner.

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To limit the overall volatility of the portfolios we usually hold several funds from the “Slow Ahead” group but there is no point when all sectors are going down, as they were in February. However, in March the Mixed Investment 0-35% Shares sector went up by 0.49%, Mixed Investment 20-60% Shares sector made 1.52%, and Mixed Investment 40-85% Shares sector beat them both, gaining 2.83%.

Last week, we invested in a couple of funds from the Mixed Investment 40-85% Shares sector. We chose Liontrust Balanced and HSBC Balanced, which both appeared in our four-week table.

Past performance is not a guide to future performance.

The leading sector from the more volatile “Steady As She Goes” group was Flexible Investment. We also added a couple of funds from this sector: Liontrust Global Alpha and LF Odey Opus.

Past performance is not a guide to future performance.

We already hold a number of funds from the “Full Steam Ahead” group and Specialist/Thematic sectors. These include the Liontrust Latin America, TB Guinness Global Energy and JPM Natural Resources funds, which have gone up by more than 10% since we went into them earlier this year.

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