Written by: Emma Wall | Hargreaves Lansdown
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Markets are likely to be volatile in the coming 12 months due to challenging macro-economics
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Fund investors should look to diversify existing holdings and add defensive selections
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HL’s funds to watch offer exposure to a mix of asset classes and geographies
Before we dive into the selections, it is important to remember a few things. Investing is by its very nature long term. Funds are designed to be held for five years plus, in a portfolio alongside other, different funds, to help reduce risk through the market cycle. This long-term view means that every investor will face periods of uncertainty and market volatility in their journey to reach their financial goals. We think 2024 is likely to be one of those bumpy times.
But that doesn’t mean you shouldn’t invest. In fact, times of market turbulence can create excellent investment opportunities – and don’t worry about getting your timing just right, over the long term, it is time in the market, not timing the market which has been proven to be the best indicator of outperformance.
With this in mind, HL’s Fund Research team has chosen 5 Funds to Watch for 2024. Three of the selections are below – the others can be found on our website and in our Guide to 2024 which also includes our outlook for stock, bond and commodity markets and the global economy.
Artemis Corporate Bond
Stephen Snowden has been the manager of the fund since joining Artemis to launch it in October 2019. He's a seasoned corporate bond investor with over 20 years' experience running similar strategies. We believe his experience leaves him well positioned to navigate through different market conditions. The fund aims to generate a combination of income and growth over the long-term and could form part of a diversified bond portfolio or diversify an equity-focused portfolio.
The fund's investment process blends 'top down' macro-economic research with 'bottom up' fundamental analysis of individual companies' bonds. Within bond markets, we think that the investment grade corporate bond space is well placed to navigate market conditions from here. With the potential of recession in 2024 we are mindful of bonds issued by those companies with the worst credit ratings in the high yield category, because of the heightened risk of those companies defaulting on their bond payments during a recession. At the same time, investment grade corporate bonds often offer a higher yield than their government bond counterparts, which helps to cushion against potential losses should the economy deteriorate.
More detail on this fund: Artemis Corporate Bond (Class I) Accumulation Fund Price & Information (hl.co.uk)
Troy Trojan
The managers of this fund Sebastian Lyon and Charlotte Younge aim to shelter investors' wealth just as much as grow it. Rather than trying to shoot the lights out, the fund aims to grow investors' money steadily over the long run, while limiting losses when markets fall. It tries to experience smaller ups and downs than the broader global stock market or a portfolio that's mainly invested in shares.
With the potential for recession in 2024, we think using a fund that invests with a defensive mindset makes a lot of sense. The diversification from both government bonds and gold within this fund has the ability to smooth returns in multiple market environments.
More detail on this fund: Troy Trojan (Class X) Accumulation Fund Price & Information (hl.co.uk)
Fidelity Global Dividend
Daniel Roberts is a highly experienced global investor with a focus on providing long-term income and growth whilst looking to provide shelter in weaker markets. He has managed the fund for over ten years and developed a robust process looking for quality companies that provide sustainable dividends whilst being mindful of valuations.
Roberts invests in companies that he believes have predictable revenue streams that can continue to grow and provide reliable dividends to investors. He has a preference for companies with simple balance sheets, little debt and experienced management teams.
The focus on valuations and income has led Roberts to have a high degree of exposure to Europe and the UK. This also means he will typically be less exposed to the US market when compared to a global benchmark. Although we are wary of the fund’s Europe overweight, given the macroeconomic backdrop, from a valuation point of view the market looks cheap compared to its long-term history. Roberts also has a strong track record of picking winning stocks in Europe, and the income discipline of the fund helps avoid value traps.
More detail on this fund: Fidelity Global Dividend (Class W) Accumulation Fund Price & Information (hl.co.uk)
Related: Welcome to the Year End Rally