10 UK fund and trust tips for 2017

We pull together a range of fund and investment trust tips for the UK from our panels of experts.

You can find a profile of our panellists at the end of this article.


Core growing income and growth

JOH UK Equity Income has one of the best track records for income growth year after year, says Brian Dennehy. He also points out that when it comes to total returns, the fund is among the top 20 per cent of performers over virtually every timeframe in the past decade.

Managers Clive Beagles and James Lowen stick mainly to the big blue-chip names in the FTSE 100.


Core growth

Liontrust's Special Situations fund was tipped across the board, with three of our panel members marking the fund down as their number one choice for core growth, due to the fund managers' careful approach to the construction of their portfolio.

Jason Broomer says Anthony Cross and Julian Fosh look for companies that have a durable competitive edge - steady businesses generating high levels of cash.


Adventurous growth

Money Observer Rated Fund tickR&M UK Equity Long-term Recovery just about edged out competitors on grounds of its 'value' style, which has been tipped to come back into fashion in 2017.

Value has been deeply out of favour versus 'quality growth' over the past five years. Burdett adds: 'It's volatile, but worthwhile in my view.'

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Adventurous income and growth

It has been a tough year for SLI UK Equity Income Unconstrained's fund manager Thomas Moore, but his impressive long-term performance means he can be forgiven.

Alan Steel notes the fund's bias towards mid and small-caps has not paid off in 2016 because of the Brexit fallout, but he thinks that the fund 'is overdue a strong recovery' in 2017. Moore avoids banks popular with other income funds.


Immediate income

Money Observer Rated Fund tickThose who desire immediate income today at the expense of reduced capital growth need look no further than Schroder Income Maximiser, which has a juicy 6 per cent yield.

The fund uses a complicated derivatives strategy in order to magnify the amount of income generated.

John Husselbee explains: 'The managers sell away some of the potential upside of their holdings in exchange for additional income and capital preservation in falling markets.'


Income and growth

Managed by Simon Gergel at Allianz Global Investors, The Merchants Trust has grown its dividend for 34 consecutive years and has decent revenue reserves to support future growth.

Meanwhile its portfolio of blue-chips is more focused on the FTSE 100 than many of its peers, and this has served it well of late.

Andrew McHattie says Merchant's attractive yield helps to underpin its share price, and its discount could tighten when some expensive debt matures in 2018, reducing borrowing costs.


Income and growth

Temple Bar has been one of the stars of the UK equity income sector since last February's market setback, and Peter Hewitt hopes that manager Alastair Mundy's value-oriented approach should continue to work well in a difficult environment for UK equities.

Two thirds of its portfolio is in FTSE 100 companies. The dividend has been raised every year since 1983, and is now paid quarterly.


Income and growth

Standard Life Equity Income trust has seen its discount widen following a disappointing year. But Jean Matterson likes it because Thomas Moore's disciplined stock-picking approach differentiates it from other UK income growth trusts.

'It is not dependent on the large UK companies for income, preferring the multi-cap approach and finding stocks that have sound growth prospects along with increasing payouts,' she says.


Adventurous growth

Post-Brexit worries combined with the departure of co-manager Rosemary Banyard have seen the discount on Schroder UK Mid Cap balloon out to a five-year high. Tim Cockerill believes this could be a good entry point.

Longstanding manager Andy Brough remains in place, and a recovery in UK domestic stocks and a tightening discount could help it perform well in 2017.

Alan Borrows also favours mid-caps in the UK equity market following the Brexit sell-off. 'Over the long term they will outperform,' he says.


Adventurous growth

John Newlands thinks BlackRock Throgmorton looks substantially undervalued, given its good long-term record.

He believes the appointment of Dan Whitestone to work with the highly experienced manager Mike Prentis has enhanced its prospects, and contends that the trust's unusual ability to achieve a long-short strategic overlay via a sub-portfolio of contracts of differences 'gives it some downside protection, which may be no bad thing in a changeable post-Brexit world.'


Robert Burdett

Robert Burdett began managing funds of funds at Rothschild and then Credit Suisse. In 2007 he joined Thames River to help set up its multi-manager business, later taken over by F&C.

Brian Dennehy

Brian Dennehy is managing director of advisory firm Dennehy Weller. In 2012 he launched FundExpert, a fund platform for self-directed investors looking for fund research.

Mick Gilligan

Mick Gilligan is a partner in private client stockbroker Killik & Co. He is currently head of research. He analyses funds and trusts and manages the firm's multi-manager portfolio service.

Jason Broomer

Jason Broomer has more than two decades' experience in fund research and running portfolios for private clients. He runs Square Mile's managed portfolio service.

John Husselbee

John Husselbee is head of the Liontrust multi-asset team. He has 25 years of experience in managing multi-manager portfolios, including at Henderson and Rothschild.

Alan Steel

Alan Steel became an IFA in 1973, and launched his firm Alan Steel Asset Management in 1975. It now advises over 2,000 families, with more than £1 billion under management.


Alan Borrows

Alan Borrows is a senior fund manager at Liverpool-based Seneca Investment Managers, which favours a value-oriented approach to multi-asset investment.

Jean Matterson

Jean Matterson is a partner at Edinburgh-based Rossie House Investment Management, which has long favoured investment trusts for private client portfolios.

John Newlands

John Newlands has overall responsibility for investment trust research at Brewin Dolphin. It has £33 billion under management, of which over £4 billion is in investment trusts.

Tim Cockerill

Tim Cockerill is investment director of Bristol-based Rowan Dartington which has client assets in excess of £1 billion. Investment trusts have featured in its portfolios for many years.

Andrew McHattie

Andrew McHattie runs The McHattie Group, an authorised firm which publishes a specialist investment newsletter. He has been the editor of Investment Trust Newsletter since 1966.

Peter Hewitt

Peter Hewitt has run the F&C Managed Portfolio trust since 2008, having managed its forerunner, F&C Managed Portfolio Service, since 2002. He previously worked at Ivory & Sime.

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