Interactive Investor

Fund Spotlight: five funds that can keep on giving in 2024

The ii Research Team recommends five funds for every family member this Christmas.

13th December 2023 10:35

by ii Research Team from interactive investor

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With Christmas approaching fast, the ii Research team have been getting a head start on gift ideas, compiling a list of five investments that can keep on giving into 2024 and beyond for your family’s portfolios this festive period.

Parents

GQG Partners Global Equity Fund

Give the gift of global equities this Christmas with the GQG Partners Global Equityfund.Managed by co-founder and chief investment officer Rajiv Jain, the fund seeks quality-growth companies globally with a successfully proven strategy.

While management assesses businesses’ financial strength, competitive advantage and fair valuations, there’s also an emphasis on wider economic trends that defines portfolio positioning. 

The fund is currently overweight India, France, Denmark and has notable biases in favour of technology - 25% (3% overweight), healthcare – 22% (10% overweight) and energy - 17.5% (12% overweight).

The high degree of flexibility afforded to the manager has seen a strong track record over the last few years. At the end of 2021, the fund cut its 20% exposure to technology to single digits and energy exposure was hiked to over 20%, capitalising on the trends of these markets. Evidenced by positive returns of 4% throughout 2022, versus the MSCI All Country World Index(-8%) and peers (-18%).

However, the high turnover and benchmark divergence has not equated to a high-beta strategy. Instead, the fund has shown lower volatility and drawdowns than peers and the benchmark over three years. While fundamental analysis is a key aspect of the process, the product is differentiated by its dynamic macro calls and may suit long-term investors through 2024 and beyond.

Grandparents

M&G Global Macro Bond Fund

For an older family member seeking to reduce risk through bond exposure, the M&G Global Macro Bond fund is a strong option as part of the defensive bucket of a portfolio.

Managed by Jim Leaviss, the fund invests across global bonds and currency markets, taking positions in bonds and derivative instruments, both long and short subject to market views. The flexible approach gives the fund manager the freedom to actively manage duration, credit risk and currency positioning.

The fund’s top-down investment approach is based on the fund manager’s macroeconomic views on growth, inflation and interest rates, which is then followed by asset allocation based on a bottom-up approach (examining bond fundamentals) with assistance from M&G’s extensive team of credit analysts.

To reduce the strategy's overall volatility, Leaviss builds a diversified range of high-conviction, but low-to-negatively correlated themes across rates, credit, and currency markets. Currently, positioned defensively in anticipation of a potential economic downturn with a 90% allocation to government bonds.

Siblings

Invesco S&P 500 Equal Weight ETF

For a sibling you can buy an inexpensive but hopefully rewarding gift over the long term by opting for Invesco S&P 500 Equal Weight ETF.  This is  a good alternative to high-fee active funds that can struggle to outperform the US market, which is regarded as the toughest market for fund managers to gain an edge.

This exchange-traded fund (ETF) provides equally weighted exposure to US blue-chip stocks that make up the S&P 500 index. Every stock in the index is weighted at 0.2%, regardless of how large or small the company is. The fund reflects the US large-cap equity market while taking a size-neutral approach and covers approximately 80% of the available market.

The fund’s equal weight approach offers greater exposure to smaller stocks and those with lower valuations, and thus providing a better diversified approach to investing in US stocks, which could lead to potentially higher returns.

Currently, the S&P 500 is dominated by the so-called Magnificent Seven largest technology companies that make up almost 30% of the index and contributed to over 80% of the performance this year.

The Invesco S&P 500® Equal Weight ETF offers unique core exposure to US blue-chip stocks in the S&P 500 by enhancing diversification and reducing concentration at the stock and sector level.

Kids

Polar Capital Smart Energy Fund

For kids, you can afford to be adventurous with your investment gift, given they have a long investment horizon ahead of them. In addition, it makes sense to invest in a trend that has plenty of legs.

On both fronts the Polar Capital Smart Energy fund, spearheaded by seasoned manager Thiemo Lang, may fit the bill. Prioritising decarbonisation and electrification in the future energy sector, the fund has a long-term outlook that aims to capitalise off the global shift towards a more sustainable future. The fund strategically aligns with the transition to cleaner energy solutions.

The fund invests across four investment clusters: clean power generation, energy transmission, energy conversion and storage, and energy efficiency, the latter constituting 40%-50% of holdings. The current portfolio includes 43 holdings, with a 55% allocation to the US and a 10% allocation to Japan.

Anticipating favourable trends in clean energy, the manager predicts a shift from 26% to 90% renewable power generation by 2050. Current focal points for the fund include big data, energy efficiency in industrials, and silicon carbide semiconductor materials in order to capitalise on such future trends.

Employing a proven bottom-up strategy, the fund selects companies based on technological advancements, sustainability trends, and valuation screenings. Despite the potential for an elevated level of volatility on account of substantial sectoral concentration, the fund's future outlook and regulatory backing position it as a robust investment for your child this Christmas.

Partners

Capital Group New World Fund

For partners you could give the gift of exposure to the world’s fastest-growing economies. The Capital Group New Worldfund applies a flexible and cautious approach to investing in emerging markets. The fund seeks attractive returns via investment directly in emerging markets equities (at least 35% of the portfolio), as well as multinational businesses with revenue derived from developing nations, and a small amount of emerging market debt.

The fund currently allocates 45% to emerging market listed companies (versus 10% for the MSCI All Country World Index), but nearer to 60% on a revenue basis (twice that of index), in addition to 24% to the US, 21% to Europe and 37% across Asia-Pacific. Given the flexible remit, the allocations to developed and emerging market equities and credit can fluctuate based on management’s outlook for each region and asset classes.

While the fund’s performance falls short of its US-centric MSCI All Country World Index over the past five years, it far outstrips returns of peers and the MSCI Emerging Market index. Risk-adjusted returns are flattered by lesser volatility more in keeping with global shares than with emerging market shares.

 01/12/2022 - 30/11/2023 01/12/2021 - 30/11/2022 01/12/2020 - 30/11/2021 01/12/2019 - 30/11/2020 01/12/2018 - 30/11/2019
Global Large-Cap Growth Equity
GQG Partners Global Equity A USD Acc4.888.4417.25
MSCI ACWI Index5.37-1.8220.3611.4312.13
Global Large-Cap Growth Equity6.50-14.4217.4221.5214.33
Global Flexible Bond
M&G Global Macro Bond GBP I Acc-4.63-4.77-3.078.306.55
Bloomberg Global Aggregate Index-4.00-7.59-2.415.006.89
Global Flexible Bond-0.17-2.28-1.314.014.05
US Large-Cap Blend Equity
Invesco S&P 500 Equal Weight ETF Acc-2.475.33
S&P 500 Equal Weighted Index-4.479.6328.447.7511.98
US Large-Cap Blend Equity5.82-2.5125.4512.4912.32
Alternative Energy Equity 
Polar Capital Smart Energy I Acc-6.58-4.91
MSCI ACWI Index5.37-1.8220.3611.4312.13
Alternative Energy Equity -25.07-5.9514.7565.9212.45
Global Emerging Markets Equity 
Capital Group New World (LUX) Z2.38-10.049.7217.8616.59
MSCI ACWI Index5.37-1.8220.3611.4312.13
Global Emerging Markets Equity-1.27-10.753.6113.136.52

Source: Morningstar. Total Returns for funds/ Market returns for ETF (GBP) to 30/11/2023. Past performance is not a guide to future performance.

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.

Disclosure

We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.

Please note that our article on this investment should not be considered to be a regular publication.

Details of all recommendations issued by ii during the previous 12-month period can be found here.

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Related Categories

    FundsETFsEmerging marketsEthical investingBonds and giltsJapanNorth AmericaSuper 60

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