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The fund stars lighting up AJ Bell's new portfolio range

We highlight the funds AJ Bell has picked for its new ready-made portfolios for cautious, balanced and adventurous investors and those targeting an income

Online stockbroker AJ Bell has launched four ready-made portfolios featuring active funds suitable for cautious, balanced and adventurous investors and those targeting an income.

The portfolios feature between six and seven funds each, picked from AJ Bell’s 76-strong fund buy list, and cover UK and global shares, UK bonds and commercial property.

Costs are determined by the charges levied by the individual funds selected, and AJ Bell’s standard platform charges of 0.25% on accounts up to £250,000 and £1.50 per fund trade. There is no additional charge for using the ready-made portfolio service.

Asset allocation for the portfolios, and the average charges of the funds they hold, are as follows:

  Shares % Bonds % Other % Charges %
Cautious 20 70 10 0.59
Balanced 57 33 10 0.76
Adventurous 89 6 5 0.83
Income 55 25 20 0.75

 

AJ Bell chief executive Andy Bell said the portfolios were primarily targeted at customers who were new to investing.


‘They contain some of the best funds in the market that have been thoroughly researched and analysed by our team of investment experts,’ he said.

‘The majority of retail investors need help choosing funds and not all can afford to pay for advice. There are several thousand funds in the market which makes the task of putting together a diversified portfolio nigh on impossible for the typical DIY investor.’

Click through the slides to see the funds AJ Bell has selected for each of the portfolios. For each, we used AJ Bell's tool to see how £10,000 would be invested.

To view the slides all on the same page, click here.

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Online stockbroker AJ Bell has launched four ready-made portfolios featuring active funds suitable for cautious, balanced and adventurous investors and those targeting an income.

The portfolios feature between six and seven funds each, picked from AJ Bell’s 76-strong fund buy list, and cover UK and global shares, UK bonds and commercial property.

Costs are determined by the charges levied by the individual funds selected, and AJ Bell’s standard platform charges of 0.25% on accounts up to £250,000 and £1.50 per fund trade. There is no additional charge for using the ready-made portfolio service.

Asset allocation for the portfolios, and the average charges of the funds they hold, are as follows:

  Shares % Bonds % Other % Charges %
Cautious 20 70 10 0.59
Balanced 57 33 10 0.76
Adventurous 89 6 5 0.83
Income 55 25 20 0.75

 

AJ Bell chief executive Andy Bell said the portfolios were primarily targeted at customers who were new to investing.


‘They contain some of the best funds in the market that have been thoroughly researched and analysed by our team of investment experts,’ he said.

‘The majority of retail investors need help choosing funds and not all can afford to pay for advice. There are several thousand funds in the market which makes the task of putting together a diversified portfolio nigh on impossible for the typical DIY investor.’

Click through the slides to see the funds AJ Bell has selected for each of the portfolios. For each, we used AJ Bell's tool to see how £10,000 would be invested.

To view the slides all on the same page, click here.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Cautious portfolio

Bond funds make up 70% of the allocation of this portfolio and AJ Bell has picked three fixed income funds to populate that proportion.

The £1.5 billion Fidelity Strategic Bond fund accounts for a large chunk of this, at 30% of the portfolio. Managed by Claudio Ferrarese and Tim Foster after the retirement of Ian Spreadbury at the turn of the year, the fund has a wider remit than the other two bond funds featured in the portfolio.

The managers are able to invest globally in both corporate and government debt, and broadly position 60% of the funds in investment grade bonds, 20% in high yield and 20% in government debt.

Performance has lagged over the last three months, with the fund up 5.4% to the end of December, versus the 9.6% average for funds in Citywire’s Sterling Strategic Bond sector.

Returns for the TwentyFour and Royal London Corporate Bond funds, which have a narrower focus primarily on UK company debt, have been stronger.

Both beat 12.5% the average for Citywire’s Sterling Corporate Bond sector over the last three years, with the TwentyFour fund up 13% and the Royal London fund 14.6% higher.

While both have their biggest weighting to BBB-rated bonds, Royal London managers Jonathan Platt and Shalin Shah have a stronger bias to higher quality bonds, with just under 40% of the fund invested in bonds rated A or above, compared to just over 27% in the TwentyFour fund.

The portfolio’s 20% weighting features a strong UK component, with Simon Brazier’s £1.9 billion Investec UK Alpha fund accounting for 15%. The fund has lagged the average 11.1% return in Citywire’s UK All Companies sector over the last three years, delivering 8.8%.

Fidelity’s Global Special Situations fund is meanwhile a mainstay of all bar the income portfolio.

Property exposure is a feature of all four, with the Janus Henderson UK Property PAIF selected in each case.

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Balanced portfolio

Within the balanced portfolio, income funds are favoured for the bulk of the 57% exposure to shares.

Neil Woodford, dropped from AJ Bell’s fund buy list in September, doesn’t get a look in, nor does his successor at Invesco, Mark Barnett, a major shareholder in AJ Bell through his Invesco Income and High Income funds.

For UK equity income exposure, AJ Bell has plumped for Citywire AA-rated Ben Peters and Hugh Yarrow, the best performers in Citywire’s UK Equity Income sector, returning 35.4% at the helm of their £2.5 billion Evenlode Income fund over the past three years.

Popularity was such that Evenlode was forced to ‘soft-close’ the fund last year, levying a 5% initial charge for new investors. That charge does not apply for existing investors or new investors using platforms that already house the fund.

The £5.2 billion Newton Global Income fund, meanwhile, offers broader exposure to dividend stocks and has delivered strong returns, up 35.4% over three years, versus the 27.8% average for Citywire’s Global Equity Income sector.

A more value-focused pick comes in the form of Ben Whitmore’s £1.9 billion Jupiter UK Special Situations fund, up 209.4% over the last three years and beating the average for Citywire’s UK All Companies sector despite the manager’s style being out of favour.

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Adventurous portfolio

Bonds make up just 6% of this portfolio and the £1.4 billion Artemis Strategic Bond fund, a racier option than the Fidelity Strategic Bond fund used in the balanced and cautious portfolios, gets the nod.

The Artemis fund offers a higher yield, at 3.8% versus the Fidelity fund’s 2.5%, and does this by focusing on lower-rated debt. Bonds rated BB or below make up just over 44% of the Artemis fund, versus around 30% in Fidelity’s.

Funds with exposure to equities occupy the lion’s share of the portfolio, at 89%. As with all the portfolios, UK exposure represents a healthy proportion of this, and for more adventurous investors, AJ Bell is prepared to dip lower down the market cap spectrum.

Franklin UK Mid Cap is its pick for UK medium-sized company exposure. Managers Mark Hall, Paul Spencer and Richard Bullas have returned 6.7% over the last three years, trailing the 10.4% average in Citywire’s UK Medium Sized Companies sector, during a difficult period for the FTSE 250.

Fidelity Global Special Situations is the largest single fund weighting, at 26% of the portfolio. Jeremy Podger’s £2.4 billion fund is a solid performer, up 36.6% over the last three years, versus the 32.2% average for Citywire’s Global sector.

But notable absences from the portfolios are two of the biggest, and best performing, global funds: Fundsmith Equity and Lindsell Train Global Equity. Neither feature on AJ Bell’s fund buy list, and, consequently, the online stockbroker hasn’t found a place for them in its ready-made portfolios.

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Income portfolio

Shares are favoured over bonds for income, with equity funds accounting for 55% of the portfolio, and fixed income funds a quarter.

Francis Brooke’s £2.6 billion Troy Trojan Income fund, yielding 4.5%, is handed a 20% weighting.

Brooke has delivered solid total returns over the last three years – 9% versus the 6.7% average for funds in Citywire’s UK Equity Income sector. But it is the fund’s defensive qualities that shine through: over that period, the biggest peak-to-trough loss of 9.1% is among the 10 smallest in the 102-strong sector.

Henry Dixon’s £771 million Man GLG UK Income fund also features. With a 22.4% return over the last three years, it sits sixth in Citywire’s UK Equity Income sector, and yields 4.6%.

For alternative income, First State’s Global Listed Infrastructure fund is paired with the Janus Henderson UK Property PAIF, with each representing 10% of the portfolio.

The £1.9 billion First State fund, which invests in the shares of infrastructure companies, has an enviable track record. Managers Andrew Greenup and Peter Meany have delivered 41.5% over the last three years, more than any other in Citywire’s Infrastructure sector, with the fund yielding 3.2%.

Meanwhile, use of an open-ended fund for property exposure will raise eyebrows. Janus Henderson’s fund is the only active property option to feature on AJ Bell’s favourite fund list, which does not include investment trusts.

As with most other open-ended property funds, Janus Henderson was forced to suspend dealing in the aftermath of 2016’s EU referendum, only reopening the fund three months later. Repricing from rival fund managers Columbia Threadneedle and Kames last month has offered the latest sign of stress on the property fund sector.

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