AJ Bell’s Favourite Funds is a list of funds across different sectors and risk appetites that have been researched and selected by AJ Bell’s in-house investments team, designed to help investors with investment research. Paul Angell, head of investment research at AJ Bell, comments on the recent changes the team have made.
The Favourite Funds list is chosen by AJ Bell investment specialists, is regularly updated, and features only funds that AJ Bell believe offer a combination of a clear and robust investment philosophy and process, a proven management track record and value for investors.
To ensure we remain confident in the funds included in our Favourite Funds list, it is under constant review, ensuring that it continually consists of funds which we believe have a strong chance of achieving their investment objectives.
We analyse each fund’s investment strategy, the fund’s managers, and their teams, meaning developments in these areas can prompt changes to the list.
Following a recent review, we made updates in the global equities sector and infrastructure space in the second quarter of this year.
The WS Guinness Global Equity Income fund, Schroder Global Sustainable Value Equity fund and FTF ClearBridge Global Infrastructure Income fund were added to the list. We removed the First Sentier Global Listed Infrastructure fund to make way for the ClearBridge addition.”
Added: WS Guinness Global Equity Income fund
In the last quarter, we added the WS Guinness Global Equity Income fund to our Favourite Funds list.
The WS Guinness Global Equity Income fund benefits from an experienced management team, with long-tenured co-managers Matthew Page and Dr Ian Mortimer having run the strategy since its launch in 2011.
The investment process targets companies with strong balance sheets, consistent profitability and the capacity to grow dividends across a market cycle. The team avoids higher-yielding but lower-quality companies.
Another key feature of the strategy is its equal-weighted approach to portfolio construction. This equal weighting gives each position the scope to meaningfully contribute to returns.
The resulting portfolio has exhibited a higher quality and defensive tilt versus the global equity market, with lower volatility and better downside protection than the benchmark and most peers.”
Added: Schroder Global Sustainable Value Equity fund
In the global equities sector, we also decided to add the Schroder Global Sustainable Value Equity fund to the Favourite Funds list. The fund is managed by Simon Adler, Liam Nunn and Roberta Barr, who form part of the long-running value investment team at Schroders.
The investment process combines quantitative screening to identify the cheapest 20% of companies in the market, with qualitative research to understand why these businesses are out of favour and whether there is genuine recovery potential.
This naturally leads the team to a contrarian, long-term investment approach. The resulting portfolio is high conviction, typically comprising 30 to 50 stocks, and will look, and perform, very different to the broader equity market.
Given the fund’s sustainable mandate, the managers also seek companies that they believe make a positive contribution to either the environment or society, while excluding those with meaningful involvement in fossil fuel extraction, tobacco and alcohol, amongst other areas.
Investing in stocks the team deem to be both sustainable and undervalued is a key differentiator to peers.”
Added: FTF ClearBridge Global Infrastructure Income fund
In the infrastructure equities space, we added the FTF ClearBridge Global Infrastructure Income fund to the Favourite Funds list.
The fund is managed by an experienced team of specialist infrastructure investors based out of Sydney, Australia. Current holdings include US electricity provider Entergy and freight transport specialist Canadian National Railway.
The fund can exhibit low correlation to broader equity markets due to the more defensive, often contractual, nature of the cash flows of the underlying infrastructure businesses held by the fund.
Beyond the team and process, we also like the higher level of income paid by the fund than the broader market, as well as the fund’s reasonable fees.”
Removed: First Sentier Global Listed Infrastructure fund
To make way for the ClearBridge fund, we have removed the First Sentier Global Listed Infrastructure fund from the list.
Despite having an experienced management team, the fund has failed to keep pace with stronger performing peers, while also taking fewer positions away from its benchmark.
This underperformance and benchmark similarity has dampened our conviction in the First Sentier fund. We also view the fund’s lower yield as a drawback within an asset class that can provide investors good levels of income.
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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