How are the funds doing?
Since our last quarterly update in April, we’ve had volcanic eruptions in Iceland, riots in Greece, oil spills in the Gulf of Mexico and if that wasn’t enough, in the UK we’ve had the toughest spending cuts announced in a generation from our first coalition government in 70 years.
UK Commercial Property is flourishing and continues to increase its returns. Figures taken from July 2010 Money Management show that over the last 12 months, our fund selection of Ignis UK Property has achieved growth of 19.9% compared to the average of 14.4%. Income yields remain steady, justifying its continued inclusion in our income portfolios.
On the UK side, we are fortunate that the UK Equity and Corporate bond sectors have a broad range of funds from which to choose and we have been able to identify some funds that have satisfied the criteria and intend to suggest their use from 1st July.
So What’s Changing?
For our Income Clients we’d like to protect the yields as well as pursuing capital growth. Therefore, we are recommending switching out of Neptune Income, which is one of the remaining 6 monthly paying funds. In its place we recommend the higher yielding and more frequently distributing Invesco Perpetual Monthly Income Plus fund. The existing Neptune fund currently yields 4.63% per annum, but the Invesco fund brings with it a yield of 7.05%, which means the overall income produced by the portfolio increases.
Fidelity Special Situations is failing to match up to our criteria. After taking into account such things as past performance from July’s Money Management and ratings from OBSR, Morningstar and S&P; Rensburg UK Mid Cap Growth Trust satisfies our rigorous standards and we recommend a switch into this fund. Fidelity Special Situations is currently underperforming slightly against the FTSE 100, whereas Rensburg UK Mid Cap Growth is outperforming.
As M&G Corporate Bond has failed to satisfy the criteria, we are recommending a switch into Fidelity Extra Income. The new fund has a slightly higher yield and the possibility of better growth than the M&G fund.
We continue to operate Fundwatch to achieve the best investment environment for our Wrap clients. We still monitor UK and Global indices on a daily basis and will contact Wrap clients by email if any of these reach a trigger point where they might want to protect part of their investment by disinvesting some to the most cautious portfolio.