Troy Trojan, Invesco Perpetual Global Targeted Return and Artemis Strategic Assets are three funds which could provide investors with piece of mind when held together in one portfolio, according to Shore Financial Planning’s Ben Yearsley (pictured). 
This comes as part of an ongoing series which asks investment professionals for three of their favourite funds which, due to varying mandates and aims, will maximise diversification while capturing upside over the long term.
In the below article, managing director Yearsley discusses his three picks and why they would complement each other.
Troy Trojan
First up is FE Alpha Manager Sebastian Lyon’s £4.2bn Troy Trojan fund, which has been awarded five FE crowns. It aims to provide real income and growth over the long term with a notable emphasis on capital preservation.
Yearsley said: “The aim is a simple one of firstly protecting investors’ capital and then making it grow every year.
“This multi-asset fund is a blend of equities, fixed interest and commodities such as gold. It would typically lag a strongly rising market, but I would expect it to catch up when markets fall.”
Given how well markets have performed over recently, it is perhaps no surprise that the fund has underperformed its FTSE All Share benchmark over five years.
However, the fund comes into its own throughout the course of a market cycle. During 2008 for instance, it managed to achieve a positive return of 1.11 per cent while its benchmark lost 29.93 per cent.
Over the last decade to the end of August, it has comfortably outperformed the index with a significantly lower maximum drawdown (which measures the most money lost if bought and sold at the worst possible times), downside risk (which predicts susceptibility to lose money during falling markets) and annualised volatility.
Performance of fund vs index over 10yrs
Source: FE Analytics
In terms of asset allocation, the fund currently has 29 per cent in cash (which includes US and UK Treasury bills), 24 per cent in overseas equities, 19 per cent in US index-linked bonds and smaller weightings gold investments, UK index-linked bonds and UK equities.
“A typical equity for them is a company with little debt or low debt relative to their assets on the balance sheet and a strong franchise,” Yearsley continued. “I do happily hold this in my SIPP and rarely look at it. This isn't an absolute return fund so it will and does fall in value.”
Troy Trojan has a clean OCF of 1.05 per cent.
Invesco Perpetual Global Targeted Returns
Next on Yearsley’s list is Invesco Perpetual Global Targeted Returns, which was launched in 2013 by ex-GARS managers Dave Jubb, David Millar and Richard Batty.
The £11bn fund resides in the IA Targeted Absolute Return sector and aims to provide a positive total return in all market conditions over rolling three-year periods.
“Lots has been made of absolute return funds and whether they are worth the price. I'm going to stick my neck out and say most aren't worth the price as whilst many protect capital, very few actually consistently make you money - defeats the purpose of investing doesn't it?” Yearsley argued.
“One fund I do like is Invesco Perpetual Global Targeted Return fund. Since launch four years ago this fund has delivered about a 20 per cent return.”
Performance of fund vs benchmark since launch
Source: FE Analytics
Like the behemoth Standard Life GARS fund, Invesco Perpetual Global Targeted Returns uses a number of different strategies – such as pair trading – in order to reflect the macro views of the management team.
Given that it will predominantly take positions of one asset versus another, the fund aims to provide steady risk-adjusted returns even during times when positive opportunities are thin on the ground.
“Risk is controlled and although there is no guarantee of success the first few years have been encouraging,” Yearsley said. “Again this fund will not keep pace with a strong bull market.”
Invesco Perpetual Global Targeted Returns has a clean OCF of 0.86 per cent.
The third and final fund on Yearsley’s list is William Littlewood’s Artemis Strategic Assets, which has an AUM of £794m and resides in the IA Flexible Investment sector.
The managing director said: “When the fund launched in 2009 its twin aims were to beat cash and the FTSE All Share. It's outperformed the former, but has fallen quite a way behind the All Share.
“Despite this, it has still delivered a 90 per cent return in eight years for initial investors. A mix of equities, commodities, currencies and some bonds (both long and short positions) make up this fund.
“The biggest detractor to performance since launch has been the short position on Japanese government bonds as Littlewood thinks they are due a massive fall at some point. Unfortunately he's been fighting the Bank of Japan ever since and has so far come out the loser.”
Over five years to the end of August, the fund has returned 41.10 per cent compared to the FTSE All Share’s return of 63.66 per cent.
Performance of fund vs benchmark over 5yrs
Source: FE Analytics
That said, it has done so with a lower downside risk ratio and annualised volatility – albeit a slightly higher maximum drawdown – than its benchmark.
In terms of the fund’s asset allocation, the fund is short several government bonds as well as currencies such as the Japanese yen, the British pound and the Chinese yuan.
In terms of long positions, his largest regional equity exposures are to the UK at 64.8 per cent followed by the US at 16.8 per cent and Germany at 6.7 per cent. He also has 15.6 per cent in precious metals and is long the Swedish krona, the Singapore dollar and the US dollar.
Artemis Strategic Assets has a clean OCF of 0.86 per cent.