Over the last 20 years, the FTSE 100 has resembled a rollercoaster. From 1995 the UK large-cap index rose to the as-yet-unbroken all-time high of 6951 at the end of 1999 – before it promptly plummeted losing almost half its value over the next three years.
The FTSE climbed again, making great gains to 2008. But then despite former Chancellor of the Exchequer Gordon Brown’s claim his party had ended boom and bust, the FTSE 100 lost all those gains.
It is not just the UK stock market that has been so turbulent. The peaks and troughs of the US’ S&P 500 index mirror the FTSE’s, as does France’s CAC 40 index – and the Hang Seng index in Hong Kong is even more volatile.
While the triggers for each bear market may be different, the skills to protect investors’ money while the stock market tumbles are best acquired through experience. Fund managers that have seen it all before are better equipped to keep a cool head while others around them panic, and adapt their strategy to make sure that they don’t lose as much money as the market.
UK Equity
Lowland Investment Trust (LWI) has been managed by James Henderson since January 1990, and been at parent company Henderson since 1983. The Morningstar Analyst Silver Rated trust has a higher risk profile, and the lower-cap exposure makes it a good fit with a core larger-cap UK equity offering.
Morningstar analyst Jackie Beard says Henderson builds a diversified portfolio across the market-cap spectrum and likes to have a tail of AIM-listed stocks. That means the fund won’t suit everyone as it will be too high-risk for some, but in his search for growth of both capital and income he believes some of the best opportunities can be found lower down the cap scale.
He takes full advantage of the fund’s fixed capital structure here and will take positions in these names that would otherwise be inaccessible to him. He doesn’t ignore large caps, though, and typically holds around one third of total assets in top FTSE names.
European Equity
Jupiter European Opportunities (JEO) is a Gold Rated trust, which analysts consider a compelling choice for European equities. Since the fund’s launch in 2000, it has returned more than 13% annualised, some 8 percentage points more than its average Morningstar Europe Flex-Cap Equity Category peer. Not only that, the manager Alexander Darwall – who has been in charge since launch – has achieved consistent outperformance in every year bar one, and that one was 2008 when gearing exacerbated the market falls.
Global Equity
Bankers (BNKR) is Silver Rated, and analysts think it is a strong choice for global large-cap exposure. The trust’s manager, Alex Crooke, brings a wealth of experience. He started his career in 1990, joined Henderson Global Investors in 1994 and was appointed to run Bankers Trust in 2003; thus, he has seen firsthand a number of market cycles over his investing career.
Asia Pacific Equity
Schroder Oriental Income (SOI) for income-seeking investors, Morningstar analysts think Schroder Oriental Income fits the bill. Fund manager Matthew Dobbs has been in situ here since fund’s launch in July 2005, but his experience in Asian equities extends much further. He joined Schroder in 1981 as an investment analyst and started running money four years later; thus, he has witnessed a number of market cycles over the years.
Morningstar Direct was used to filter investment trusts with the longest standing fund managers, and who were also Morningstar Analyst Rated Gold, Silver or Bronze
