Lowman says the opportunities for income in the fixed income space are getting harder and harder to come by, which is why the firm is turning to equities for both growth and income.
He highlights several funds that the firm is backing in its model portfolios, for investors with various time horizons.
Long-term
Lindsell Train UK Equity
An overall theme in Investment Quorum’s model portfolios is funds run by proven stockpickers and Lowman says FE Alpha Manager Nick Train is one of the best.
"Nick Train as a stockpicker runs his fund a lot like Warren Buffett. He buys great companies and sticks with them for a long time," he said.
"He’s good at weathering most storms and he’s come out lately with some pretty good numbers."
The five crown-rated Lindsell Train UK Equity fund has strongly outperformed the IMA UK All Companies sector and FTSE All Share over one, three and five years.
Over the last five years, the £691.3m fund has more than tripled the gains of the sector and index, returning 126.51 per cent.
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
Although it does not have an income mandate, the fund is yielding 2.53 per cent – not far off many government and investment grade bond funds of late.
It requires a steep minimum investment, but is available to retail investors via certain platforms.
Franklin UK Mid Cap
Mid cap funds tend to perform well during market rallies, and Lowman says the Franklin UK Mid Cap fund, headed up by FE Alpha Manager Paul Spencer, has been one of the standout performers in the space.
"Paul Spencer is a good stockpicker. He is sat up in Leeds so he knows all the businesses around the midlands very well," he said.
"His track record is very good. He’s got a solid base and a really good strategy."
The fund, which has four FE Crowns to its name, is a top-quartile performer over one, three, five and 10 years.
Since Spencer took over the portfolio in February 2006, it has made 147.68 per cent, while the IMA UK All Companies sector has gained 39.99 per cent. The fund’s FTSE 250 ex ITs index benchmark is up 89.07 per cent.
It is yielding 0.72 per cent.
The fund requires a minimum investment of £1,000 and has ongoing charges of 1.58 per cent.
First State Asia Pacific Leaders
In spite of the beating its sector has taken in recent weeks, Lowman says he is continuing to back the outperforming First State Asia Pacific Leaders fund.
"The fund has done exceptionally well. Angus Tulloch is a great stockpicker. It’s in a very safe pair of hands," he said.
The fund, run by FE Alpha Managers Tulloch and Alistair Thompson, has been one of the top performers in the IMA Asia Pacific ex Japan sector over one, three and five years.
It has taken a hit in recent months as Asian markets tumbled further than their developed counterparts, but it has still retained outperformance against the sector and MSCI Asia Pacific ex Japan index.
The five crown-rated fund requires a minimum investment of £1,000 and has ongoing charges of 1.55 per cent. It has a nominal yield of 0.29 per cent.
Baring ASEAN Frontiers
Seeing as First State has moved to soft-close some of its largest portfolios, the Asia Pacific Leaders fund included, Lowman says many investors will have to look elsewhere.
He tips the Baring ASEAN Frontiers fund, which he says is a more "off-piste take on more traditional Asian markets".
"We added the fund to our models about six months ago. It’s more domestically driven and doesn’t rely so much on the US consumer and other outside forces," he explained. "The fund has done very well."
The five crown-rated portfolio, run by Soo Hai Lim, sits in the IMA Specialist sector, making it difficult to compare with other funds.
However, it has returned 114.39 per cent since launch in August 2008, compared with 108.92 per cent from the MSCI South East Asia index.
Performance of fund vs index since launch
Source: FE Analytics
Baring ASEAN Frontiers requires a minimum investment of £2,500 and has ongoing charges of 1.85 per cent.
Current markets
Ignis UK Property
As the hunt for income becomes more and more difficult in the bond space, Lowman says he is making his first foray back into property in more than four years.
He likes the £967.2m Ignis UK Property fund, run by George Shaw.
The fund is yielding 3.5 per cent, which Lowman says is attractive.
"The yields are as good as those in the bond market, with the potential of a pickup in the UK economy which will bode well for commercial property. We’re really looking for yielding equities because we’re finding it more and more difficult with bonds."
Property has been a tough place to be after the financial crisis, but Shaw has managed to outperform his peers in the IMA UK Property sector over the last five years.
The fund has lagged the sector over one and three years but his short-term performance stands out, maintaining its position in positive territory while other portfolios in the sector have been taking heavy hits in the recent downturn.
The fund requires a minimum investment of £500 and has ongoing charges of 1.51 per cent.
Baillie Gifford Japanese
"We’re looking to increase our weighting to Japan. The yen has weakened substantially and there will be a kicker coming through on corporate earnings, which we haven’t seen yet," Lowman said.
"Japan is a new theme for us to increase," he added.
Lowman already holds the £597.6m Jupiter Japan Income fund, run by Simon Somerville, but he says he is looking to add the five crown-rated Baillie Gifford Japanese fund.
The £268.6m fund is run by Sarah Whitley and Matthew Brett and is yielding 0.3 per cent.
Japan has been a roller-coaster ride for investors over the last 20 years, but the team at Baillie Gifford have managed to keep the fund in the top-quartile over one, three, five and 10 years.
Since the duo of Whitley and Brett came on board in 2007 and 2008, the fund has strongly outperformed its peers, picking up 51.05 per cent over the last five years. The sector gained 28.58 per cent.
Performance of fund vs sector over 5yrs
Source: FE Analytics
The fund requires a minimum investment of £1,000 and has ongoing charges of 1.53 per cent.
