There was not a single reader who said they were investing in a fixed interest fund and only a handful mentioned multi-asset portfolios.
The bulk of our users’ buy-lists are dominated by pure equity funds, particularly those that invest in volatile areas such as smaller companies and emerging markets.
Here we look at three of the riskier funds that at least two of our readers flagged up, and that suit a long-term investment horizon:
BlackRock Gold & General
Gold equities have had a bad time of late, significantly underperforming both the gold price and the wider equity market.
This £2.6bn fund has protected against the downside better than most of its peers, but is still down almost 26 per cent over the last two years.
Performance of fund vs indices over 2yrs
Source: FE Analytics
FE Trustnet reader "hit and miss" has been drip-feeding money into the fund and will continue to do so this ISA season:
"I seem to be buying it cheaply at the moment and believe the upside leverage will be enjoyed by the miners when it bounces back," they said.
AWD Chase de Vere’s Patrick Connolly thinks this is both a good fund choice and a good way to invest.
"I’d say this was a good idea – as long as the investor has a long time horizon and can take a high degree of volatility," he said. "It’s the kind of fund that can make you massive returns."
"Gold equities have lagged the gold price by up to 30 per cent in recent years and there’s every possibility that this gap will close."
"Drip-feeding is a sensible way to invest, because it means you negate the impact of market timing."
"Managers at the likes of BlackRock have been saying for a long time now that now is the time to invest, and whether gold equities start to move now or in a year’s time, I think they might be right."
The four crown-rated fund is run by FE Alpha Manager Evy Hambro (pictured). It is the only gold-focused fund with a 10-year track record, during which time it has returned 241.53 per cent.
Like most gold funds, it has delivered losses over one, three and five years, but it is by far the least volatile of those with a long enough track record. BlackRock Gold & General is one that is rated highly by the FE Research team and as a result has been included in the FE Select 100.
FE Research analyst Amandine Thierree emphasises that the fund is not for the faint-hearted, and says investors should look to invest in it for at least 10 years.
Thierree says a gold fund has very good diversification benefits, and believes Hambro’s team is more equipped than most to invest in the highly volatile area.
"The fund would be well suited in an equity portfolio, as performance patterns have shown little correlation over long periods of time," she said.
"BlackRock has a long track record of investing in natural resources and the group’s reputation in this area means the fund has excellent access to company directors."
"The team also has the background required to understand the different business models of mining companies."
The only other gold-focused fund in the FE Select 100 is Investec Global Gold.
BlackRock Gold & General requires a minimum investment of £500 and has a total expense ratio (TER) of 1.94 per cent.
Cazenove UK Smaller Companies
FE Alpha Manager Paul Marriage's £366m portfolio was flagged up a number of times by ISA investors this year.
This is another fund that is included in the FE Select 100, and looking at its performance record, it is easy to see why.
According to FE data, the fund is a top-quartile performer in its IMA UK Smaller Companies sector over one, three, five and 10 years.
Performance of fund vs sector and index
| Name | 1 yr returns (%) | 3 yr returns (%) | 5 yr returns (%) | 10 yr returns (%) |
| Cazenove UK Smaller Companies | 31.94 | 100.87 | 97.92 | 392.42 |
| IMA UK Smaller Companies | 18.12 | 59.03 | 46.7 | 261.24 |
| FTSE Small Cap Index (ex IT) | 28.22 | 45.68 | 24.65 | 143.48 |
Source: FE Analytics
The fund has easily beaten its FTSE Small Cap (ex IT) benchmark over these timeframes, with less volatility.
"While this fund invests in the stocks of smaller companies based in the UK, the two managers, Paul Marriage and John Warren, intend to identify the country’s future leading firms," said Thierree.
"They closely analyse each business’s products, market, margin and management to determine if it has the potential to be a winner over the long-term."
"Marriage and Warren like specialised companies that both operate in niche markets and put an emphasis on research and development to create new products."
The managers avoid oil & gas stocks, which they believe are too difficult to value, and also companies that have significant debt on their balance sheets.
They are bottom-up investors who tend to ignore macro noise and do not make sector bets, instead focusing on company fundamentals.
Top-10 holdings at the moment include digital rights company Perform Group and housebuilder Telford Homes.
"Marriage and Warren invest in businesses they understand," she continued. "They prefer UK-based firms because they are easier to visit and keep track of, and also because their management teams are more likely to understand the UK economy."
Thierree (pictured) believes Marriage is one of the best stockpickers around, as a result of his genuine love of fund management – arguably a rarity in the business.
"He is a passionate fund manager who demonstrates a genuine interest in the companies he invests in.""The process he follows is straightforward and robust, and managing a hedge fund in the same manner has helped to instill a discipline of selling at the right time," she added.
The five crown-rated fund requires a minimum investment of £1,000 and has a TER of 1.54 per cent.
CF Ruffer Pacific
FE Trustnet user “Ian” says he likes CF Ruffer Pacific as a lower-risk way of tapping into emerging Asia.
Rob Gleeson, head of research at FE Research, thinks the fund is well-placed to outperform its peer group during down market – as it has done already.
“The manager combines a top-down/bottom-up approach: she believes that it is not possible to invest in the Asia Pacific region without a good understanding of what drives the local economy, but also places an emphasis on extensively researching each company,” he explained.
“As the market matures, the latter step becomes more important because Mary McBain aims to invest in businesses that are more resilient to the current global slowdown. This means she favours companies with healthy finances and a low level of debt and discounts those with only short-term prospects.”
This way of investing has worked very well so far; according to FE data, the fund has returned 141.71 per cent since its launch in December 2003, significantly outperforming its MSCI Asia Pacific benchmark, with less volatility.
Performance of fund versus index since launch
Source: FE Analytics
Our data shows that the £178m fund has an annualised volatility of 15.04 per cent over five years, compared to 18.23 per cent from its benchmark.
McBain can hold assets in Japan – a developed market, which is typically less volatile than those in emerging Asia. The region currently has a 10 per cent weighting.
Gleeson says she is currently cautiously positioned – illustrated by her cash weighting of 15 per cent – and so may not be appropriate for someone who is overly bullish on emerging markets.
The fund has a minimum investment of £1,000 and a TER of 1.59 per cent.
Please keep your suggestions coming, as we will look to write another piece if there is enough demand for it.