Jupiter Merlin Income
"One of the main attractions of this fund to us was the team running it, who have more than 70 years of experience between them," said Doug Millward, investment analyst at Lowes.
Industry stalwarts John Chatfeild-Roberts, Algy Smith Maxwell, Peter Lawery, David Lewis and Amanda Sillars make up Jupiter’s long-standing multi-manager team.
"They have a great track record in picking funds and calling the market right," Millward added.
"The fund is the more cautious of the Jupiter Merlin range, designed for income investors seeking a diversified portfolio of funds."
"The historical yield on the fund is around 3 per cent. In an environment where income is hard to come by, this fund is a reasonable proposition. Good, consistent income returns at low risk are a need of many of our clients."
The five crown-rated portfolio has consistently been a top-quartile performer in the IMA Mixed Investment 20%-60% Shares index over one, three, five and 10 years.
Over the last decade, the fund has made 132.4 per cent, compared with 78.28 per cent from the index.
Performance of fund vs sector over 10yrs
Source: FE Analytics
Asset allocation in the portfolio is fairly evenly split, with just under one-third in UK equities, one-third in fixed interest and one-third spread between Asian equity, gold ETFs and global income.
"This means that we can use it as a core in our portfolios," Millward explained.
"Lots of multi-manager funds are criticised for being expensive, but this fund produces good returns which outweigh the fees."
"It is a consistent performer over the long-term and that is what is important."
The fund requires a minimum investment of £500 and has ongoing charges of 2.36 per cent.
Investec Cautious Managed
Millward likes the £2.6bn Investec Cautious Managed fund because of its growth style and star contrarian manager Alastair Mundy’s expertise as a value investor.
"Mundy is good at unearthing opportunities where others may shy away and for being punchy in his conviction, which is essential in a market where value is hard to find," he said.
Over the last decade, the fund has outperformed both the IMA Mixed Investment 20%-60% Shares sector and its own custom benchmark – a mix of the FTSE All Share and Merrill Lynch Sterling Broad Market Index – gaining 108.93 per cent.
The sector made just 78.28 per cent while the index gained 104.03 per cent in this time, according to FE Analytics.
"Mundy’s calls are made with faith in his decisions, like his 10 per cent exposure to the Japanese market, which has paid off lately," Millward said.
"He is sitting with just under 30 per cent in government bonds and cash."
"While it may be slightly taking an edge off performance over the last couple of months, he is still top quartile over the long-term. This fund is also a core holding in one of our portfolios."
The fund requires a minimum investment of £1,000 and has ongoing charges of 1.6 per cent.
Cazenove UK Opportunities
Although Cazenove has moved to stem flows into the five crown-rated Cazenove UK Opportunities fund, Millward says Lowes uses the fund as another staple of its client portfolios.
"We started putting this fund into portfolios at the beginning of the year," he said.
"This fund is run by Julie Dean, who is brilliant at picking growth stocks for this fund. She has been running the portfolio since 2002."
"Her long-term performance is solid and it even felt like the fund’s performance dipped a bit when she was on maternity leave."
The fund is a top-quartile performer over one, three, five and 10 years, as well as over one, three and six months.
Over the last decade, the fund is up 270.56 per cent compared with 146.73 per cent from the IMA UK All Companies sector and 156.15 per cent from the FTSE All Share.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
"The fund is invested in companies across the cap scale, but recently Dean has gone for mid cap stocks and defensive large caps, such as ITV," Millward said.
"Mid caps have had a really good run, as have defensive companies, and so this has proved to be a good place to be."
"However, she has also found value in the cyclical areas of the market. The fund is currently more heavily weighted towards financials, consumer services and industrials."
Cazenove UK Opportunities requires a minimum investment of £1,000 and has ongoing charges of 1.58 per cent.
M&G Global Dividend
FE Alpha Manager Stuart Rhodes' four crown-rated M&G Global Dividend fund is another favourite at Lowes.
With a yield of 2.9 per cent, Millward says it suits its clients’ need for income in a low-interest rate environment.
"The global universe for income is much bigger than the UK one and so this global dividend fund offers investors access to a greater pool of dividend-paying stocks, as well as greater diversification," he said.
"The £6bn fund invests in around 50 stocks from eight countries and Rhodes places the stocks in three buckets, which are core defensive stocks, big dividend payers and companies that show potential to grow their dividend."
"The fund invests in emerging markets, which are higher risk, but offer attractive yields for investors."
"Managers’ due diligence in these areas, executed more easily from a large fund house such as M&G, is crucial to investing in emerging markets."
Since Rhodes took over the portfolio in July 2008, it has made 94.97 per cent, while the IMA Global sector has gained just 47.25 per cent. The MSCI AC World index picked up 59.45 per cent over the period.
Performance of fund vs sector and index since 2008
Source: FE Analytics
The fund requires a minimum investment of £500 and has ongoing charges of 1.66 per cent.
Newton Asian Income
"This is another fund that plays into the income theme, but this one is focused on Asia," Millward continued.
"This market has one of the highest payout ratios, because since the financial crisis, Asian companies are prepared to pay out their profits in the form of dividends."
"The fund has a bigger holding in Australia and New Zealand than the other Asian funds, which gives it an edge over its competitors," he added.
The five crown-rated fund, managed by Jason Pidcock and Caroline Keen, is top-quartile over one, three and five years and has outperformed the FTSE Asia Pacific ex Japan index over each period.
Over the last five years, the fund has made 118.06 per cent, more than doubling the returns of the sector and index, which are up 47.16 per cent and 51.6 per cent respectively.
It is yielding 4.26 per cent.
"Adding this fund to our portfolios makes it a great diversifier to the other geographies represented in them," Millward said.
"We have income coming from the UK and other countries and Asia is another addition to the mix that helps us offer consistent returns for clients."
The fund requires a minimum investment of £1,000 and has ongoing charges of 1.16 per cent.
