Finish Your Holiday Shopping: Five Investment Funds For Everyone On Your List

Finish Your Holiday Shopping: Five Investment Funds For Everyone On Your List
ii Research Team via interactive investor

2 months ago6 mins

The holidays are approaching fast, so here on the research team at interactive investor, we’ve been hard at work, like busy little elves. We’ve been putting together a list of five golden gift ideas – something for everyone on your list. And, unlike those novelty PJs you bought last year, these gifts actually will keep on giving.

For the parents: the GQG Partners Global Equity Fund.

Give the gift of global equities this Christmas with the GQG Partners Global Equity fund. 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 strengths, competitive advantages, and fair valuations, there’s also an emphasis on the wider economic trends that define portfolio positioning.

The fund is currently overweight on investments from India, France, and Denmark, and has notable biases in favor of technology (at 25%, that’s a 3% overweight), and in healthcare (at 22%, a 10% overweight) and energy (at 17.5%, a 12% overweight).

The high degree of flexibility afforded to the manager has helped give this fund a strong track record over the past few years. At the end of 2021, the fund cut its 20% exposure to the technology sector to single digits and it hiked its energy sector exposure to over 20%, to make the most of the trends in those markets. And that panned out well, judging by the positive returns of 4% throughout 2022, versus the MSCI All Country World Index’s -8% and other peers’ -18%.

However, the high turnover and benchmark divergence have not equated to a high-beta strategy. Instead, the fund has shown lower volatility and drawdowns than its 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.

For the grandparents: the 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, that means positioning defensively in anticipation of a potential economic downturn, with a 90% allocation to government bonds.

For the siblings: the Invesco S&P 500 Equal Weight ETF.

For a sibling, you could buy an inexpensive but hopefully rewarding gift over the long term by opting for Invesco S&P 500 Equal Weight ETF Acc. 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 big 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, so it provides 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 technology companies, which 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.

For the kids: the 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. Prioritizing decarbonization and electrification in the future energy sector, the fund has a long-term outlook that aims to capitalize on the global shift toward 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, which alone constitutes 40% to 50% of its holdings. The current portfolio includes 43 holdings, with a 55% allocation to the US and a 10% allocation to Japan.

Anticipating favorable 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 to capitalize on 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 because of substantial sectoral concentration, the fund’s future outlook and regulatory backing position it as a robust investment for your child this holiday season.

For partners: the Capital Group New World Fund

To your partner, you could give the gift of exposure to the world’s fastest-growing economies. The Capital Group New World fund 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 the 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 stocks and credit can fluctuate based on management’s outlook for each region and asset class.

While the fund’s performance falls short of its US-centric MSCI All Country World Index over the past five years, it far outstrips the returns of its 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.



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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. 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 advisor.

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