- Fund could offer some shelter in tougher markets
- It's got a good long-term track record but struggled more recently
- It does something different but we currently prefer other funds in the Flexible Investment sector
All investments go in and out of favour. That means if you only invest in one thing, you'll only be right some of the time.
The Artemis Strategic Assets Fund spreads risk by investing in a range of different investments. From shares and bonds to commodities, currencies and cash. Managers William Littlewood and Kartik Kumar adjust the fund's exposure to each depending on their economic views.
We think they've done a good job over the long run. If we go through a long market downturn, and particularly if it's a tougher environment for government bonds, the fund could offer some shelter, and maybe even a positive return. But we expect it to lag behind when stock and bond markets rise.
The managers take a genuinely different approach to others so this fund could be a reasonable way to bring diversification to a portfolio. It has a relatively high ongoing fund charge though, and we currently prefer other funds in the Flexible Investment sector. Our favourites are on the Wealth 50.
How's the fund invested?
The managers think government policies designed to lessen the impact of the financial crisis, like quantitative easing (money printing) and low interest rates, have pushed some shares and bonds to unsustainably high levels so some caution is needed. There's more detail on how each section of the portfolio is invested below.
Around half of the fund invests in shares. The managers focus on companies overlooked by other investors, but with plenty of growth potential. Around three-quarters of the share portfolio invests in UK companies and there's an emphasis on financial services companies including Lloyds Banking Group and Plus500, the online trading platform.
William Littlewood and Kartik Kumar also have a number of 'short' positions. They rise in value when share prices fall, but the opposite happens if prices rise. 85% of the fund's short positions are in US companies where they think high share prices are out of kilter with company prospects. A short in US tech giant Apple was closed at the end of last year after a period of share price weakness.
Bonds have generally performed well in recent years. But as bond prices rise, their yields fall. A growing number now pay negative yields, meaning investors who buy them when they're issued and hold them until maturity are guaranteed to make a loss. The managers don’t expect this situation to last forever. But for bond yields to rise, prices must fall.
They've therefore got large short positions in Japanese, UK, French and Italian government bonds.
The managers recently increased their short position in the Chinese renminbi. They're cautious about China's prospects because of its high debts and slowing economic growth. They think the more the economy struggles, the more the Chinese government will be forced to allow its currency to depreciate.
They also increased exposure to the Swedish krona and US dollar. They think both countries are in good financial shape and their currencies have good growth prospects.
Around 15% of the fund invests in gold, silver and platinum. These investments provide diversification and could do well if investors start to worry about the outlook for markets.
The managers also have flexibility to invest in smaller companies, emerging markets, high-yield bonds and derivatives, which adds risk.
How's the fund performed?
The fund's got a good long-term track record. Since launch in May 2009, it’s risen 73.3%*, compared with 65.8% for its benchmark. Past performance shouldn’t be seen as a guide to the future though.
|Annual percentage growth|
| Mar 14 -
| Mar 15 -
| Mar 16 -
| Mar 17 -
| Mar 18 -
|Artemis Strategic Assets||1.6%||-3.5%||14.0%||-2.0%||-5.3%|
|UK Consumer Price Index + 3%||3.0%||3.5%||5.3%||5.4%||4.9%|
Past performance is not a guide to the future. Source: Lipper IM* to 31/03/2019
Performance hasn’t been so good over the past few years. The fund's bond shorts dragged on performance because bonds have generally performed well.
An investment in Just Group held back returns more recently. Its shares have done poorly since it deferred a dividend to help shelter against potential regulatory changes. It wasn’t all bad news though. Content producer Entertainment One was one of the fund's strongest investments, boosted by strong corporate results from its television business.