Pairing funds with different styles and risk profiles can help create stronger, more balanced portfolios. In this article, Kate Marshall, Lead Investment Analyst at Hargreaves Lansdown says opposites can attract and, when they do, they often work better together.
Valentine’s Day is a celebration of great partnerships and, in investing, as in relationships, it’s often the differences that make them stronger.
Markets can be unpredictable, moods can change, and no single investment style works in all conditions. That’s why bringing together contrasting approaches can help create a more balanced and resilient portfolio.
Opposites can attract and, when they do, they often work better together. Pairing funds with different styles, regions and risk profiles can help smooth some of the ups and downs of investing, offering reassurance when markets are unsettled and support when conditions improve.
With that in mind, we’ve picked four fund pairings that show how complementary approaches can play an important role in a long-term investment strategy.
Growth and value: Baillie Gifford American and Lazard Global Equity Franchise
Growth-focused funds can deliver strong returns when investors are optimistic about highly innovative companies or those expected to deliver strong earnings growth well into the future. But they can also be more volatile when sentiment shifts or expectations aren’t met.
Pairing a high-growth fund, such as Baillie Gifford American, with a more valuation-aware, quality-focused global fund like Lazard Global Equity Franchise, which has less invested in the US than other global funds, can help balance portfolios across different market environments.
While one looks for the next generation of fast-growing businesses, the other focuses on undervalued companies with more predictable earnings – a reminder that, in investing, as in relationships, different strengths can complement each other.
Equity and bond: Rathbone Global Opportunities and Invesco Tactical Bond
While not always perfectly uncorrelated, equities and bonds can behave differently in different market conditions, including during periods of market stress.
Rathbone Global Opportunities aims to deliver long-term capital growth by investing in companies around the world but may be more exposed when market sentiment is volatile.
Invesco Tactical Bond invests in a completely different asset class and takes a flexible approach to fixed income, adjusting its positioning as economic conditions change.
Together, shares and bonds can help reduce overall portfolio volatility and provide a smoother investment journey, much like a relationship where one partner has a steady hand on the tiller during the tough times.
Core and satellite: Fidelity Index World and Jupiter India
A core-and-satellite approach combines investments in core areas with selective ones in more niche or diversified assets. Fidelity Index World provides broad, low-cost exposure to developed global stock markets and can therefore act as a dependable core holding.
This can be complemented by a more focused satellite fund, such as Jupiter India, which targets long-term growth opportunities in a single, higher-risk emerging market. Together, they offer diversification while allowing investors to express conviction in specific areas, showing how a reliable foundation with some adventure can work well together.
Adventurous and defensive: Artemis UK Smaller Companies and Troy Trojan
Smaller companies offer exciting growth potential, but they tend to be more sensitive to changes in economic conditions and investor sentiment. Artemis UK Smaller Companies reflects this more adventurous end of the risk spectrum.
By contrast, Troy Trojan focuses on capital preservation and aims to protect investors’ money during more difficult market periods by investing in a mix of assets including shares, index-linked bonds and gold.
Blending higher-risk and defensive approaches can boost long-term growth potential while helping portfolios weather tougher periods, proving that adventure and caution can be the perfect pairing.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The writer’s views are their own and do not constitute financial advice.
This information should not be relied upon by retail clients or investment professionals. Reference to any particular investment does not constitute a recommendation to buy or sell the investment.
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