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David Kempton: the best cautious funds
Our columnist and travelling investor David Kempton offers his advice on reliable, cautiously managed funds.
Having shared his pick of exotic investments, David Kempton turns his attention to the core of solid holdings that every portfolio needs.
A counterweight to riskier holdings
If you’re going to hold the racier, more esoteric investments which I enjoy (I’ve written previously of my holdings in resources, oil, potash and palm oil), it's important to maintain a sense of order and have a core holding in some good, cautiously managed funds.
The international blue chips may well be part of that core, but my biggest holdings stay in funds, where I know the manager watches the portfolio every hour of every day.
You pay a price for this, but it’s surely worthwhile to subcontract the worry and to sleep easy, secure in the knowledge of being in safe hands.
Performance is simple to monitor now, and I have always believed in following the manager who shows form over time, a policy that has worked very well for me through the decades, even if he or she moves to a new and unknown house.
I particularly like the multi-asset approach with active management, taking advantage of volatile economic and market conditions.
I'm also particularly keen that the management should be heavily invested in the fund themselves, a philosophy that has also stood the test of time.
My fund picks
I hold all the following funds, all of which fit those criteria:
Phoenix Hawksmoor Vanbrugh is my biggest holding, which has fully justified my faith in the management by being second out of 125 funds in its sector with a 62% return over three years, with significantly less volatility than the only fund in the sector to beat that performance.
I've long held RIT Investment Trust , the Rothschild family quoted vehicle, with Lord Rothschild holding 8%. The fund has achieved respectable three-year growth of 41%.
I hold the Ruffer Investment Company , which has a similar cautious management style to Vanbrugh. The principal, Jonathan Ruffer, has a substantial stake, and the fund has achieved three-year growth of 37%.
In the North Atlantic Smaller Companies investment trust the manager has a stake worth £34 million, which must concentrate the mind. This fund has achieved three-year growth of 91%. This could never be considered a cautious managed fund, but it's an interesting investment now with a 29% discount, and I expect to buy more.
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Look up the funds
- Phoenix Hawksmoor Vanbrugh A Inc
- M&G Optimal Income A Inc
- M&G UK Inflation Linked Corporate Bond A Acc
Look up the investment trusts
- RIT Capital Partners (Ordinary Share)
- Ruffer Investment Company (Ordinary Share)
- North Atlantic Smaller Cos (Ordinary Share)
- Caledonia Investments (Ordinary Share)
More from us
- David Kempton: neglected palm oil companies get my cash
- David Kempton: my African mining tips
- David Kempton: risky but rewarding resources
- David Kempton: making the most of my resources in oil
- David Kempton: how to tap into the money-growing potential of potash
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