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Investment Times

The best of all worlds

| 30 January 2015 | A A A
The best of all worlds

No recommendation

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Financial markets move up and down at different times, and it is rare for a particular sector to consistently feature at the top of the performance tables year after year, as the chart shows.

Over the long term maintaining exposure to a variety of investments can help provide more consistent returns, when compared to investing in a single asset class. It takes research to build a balanced and diversified portfolio. While some investors relish this prospect, others have neither the time nor the inclination. For this reason, some consider multi-asset funds for the core of their portfolio, which blend together investments in shares, bonds, cash and other assets including overseas shares, commodities or currencies.

One of our favourite multi-asset funds is Artemis Strategic Assets Fund, managed by William Littlewood. A highly gifted fund manager, he has made some astute calls in the past and has the courage to back his convictions, albeit he won't get it right every time.

No recommendation

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

He is currently extremely negative on bonds. Most government bond yields are at record lows when, according to the manager, the risks have arguably never been greater. £1,000 invested in a 5 year Japanese government bond today, for example, would provide a total return of just 10 pence if held to redemption. For this an investor takes on the risk of lending to a country with colossal debt. In the manager's view this debt is unlikely to be repaid without the help of higher inflation or currency debasement - both of which erode the investment value.

performance table

Past performance is not a guide to future returns. Source: Lipper IM

In addition, the manager feels bonds are likely to perform poorly when interest rates eventually rise. A rise in interest rates leads investors to demand higher income payments (yields) from bonds to compensate for the better returns available on cash. When bond yields rise, prices fall.

For this reason, the fund has a large holding of 'short' bond positions, which should benefit from falling bond prices. While the ultimate timing of any fall remains uncertain, he remains confident in maintaining his short positions. If his views prove correct, his positioning could be handsomely rewarded.

Find out more about the Artemis Strategic Assets Fund

The fund is bolstered by a relatively large exposure to gold. While quantitative easing and low interest rates continue, the manager expects demand for gold to remain strong. He equally expects it to perform well if governments encounter difficultly in paying off their debts.

So far his bond positioning hasn't paid off and this has detracted from the overall performance of the fund. However, the other elements of the portfolio, such as the equity, currency and commodity investments, have generated good returns, contributing to the fund's 58.4% growth since launch in May 2009 and highlighting the importance of a balanced overall approach. The manager has succeeded in capturing the majority of any market rally, while offering some shelter in a falling market. Past performance is not a guide to future returns and like all funds it can fall in value as well as rise.

Annual growth
  Jan 10-11 Jan 11-12 Jan 12-13 Jan 13-14 Jan 14-15
Artemis Strategic Assets 17.2% -8.2% 11.0% 13.1% -1.3%

Past performance is not a guide to future returns. Figures to 02/01/2015.

He currently favours higher risk small and medium-sized UK companies, feeling they offer good value. In contrast, he believes the US stock market looks relatively expensive. He has therefore been selling his US positions and topping up his UK small and medium-sized company exposure.

Our verdict

Many investment portfolios should feature 'core' long-term holdings and in our view Artemis Strategic Assets is a good choice. Over the long term, its balanced and diversified approach provides excellent diversification from other more traditional, equity-focused, core holdings.

Investors benefit from the flexibility of a multi-asset fund whilst also accessing the expertise of a respected fund manager. We hold William Littlewood in high regard, sharing many of his long-term views, and remain confident in his ability to add value over time.

Artemis Strategic Assets

Net initial charge 0%
Ongoing charge (OCF/TER) 0.84% p.a.
Ongoing saving 0.09% p.a.
Net ongoing charge 0.75% p.a.
Performance fee No

The charge to hold funds in the Vantage Service is 0.45%. Where savings are paid as a loyalty bonus, they may be subject to tax in the Fund & Share Account.

Find out more about this fund including how to invest

Please read the key features/key investor information document in addition to the information above.

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.