The global funds suitable for low-,medium- and high-risk investors

Buying a global equity fund makes a lot of sense for all types of investors, whether they are cautious and want to protect their cash or more aggressive and in search of strong returns.

Overall, FE fundinfo’s Adviser Fund Index (AFI), a panel of financial advisers, recommended 10 such portfolios that could serve cautious, balanced and aggressive investors well.

Like the UK picks, which Trustnet covered last week, some investors will choose to go down the passive route. In this area, the advisers recommended the L&G Global 100 Index Trust, a £461.8m tracker portfolio that aims to replicate the S&P Global 100 index.

Launched in 2002, the passive fund is more heavily weighted to the US than other trackers, with a 73.4% allocation to the country. Amazon, Apple and Alphabet as well as Microsoft and JP Morgan Chase make up the top five holdings.

The fund, which charges 0.14%, has 6.9% invested in the UK and 5.5% in Switzerland, the second- and third-largest country weightings.

The remainder of the seven global funds recommended for investors of all risk tolerances are actively managed. FE fundinfo Alpha Manager Terry Smith’s £27.8bn Fundsmith Equity fund headlines the group.

He uses a buy-and-hold approach, picking a concentrated portfolio (currently 29 positions) that can sustain high returns on capital, have hard-to-replicate business models and are resilient to innovation.

Fundsmith Equity has made investors 494.6% over the past decade and has enjoyed above-average returns among its IA Global peers in each calendar year since 2011.

Source: FE Analytics

The second-best fund on the list over the past decade has been the $5.5bn (£4.1bn) T. Rowe Price Global Focused Growth Equity fund, which has made investors 485.2% over 10 years.

Managed by Alpha Manager David J. Eiswert, it has more than half of its portfolio invested in the US, but at 56.5% it is a relative underweight compared with its MSCI AC World index benchmark.

Rathbone Global Opportunities, the £4.3bn fund run by Alpha Manager James Thomson, is the only other fund with a 10-year track record, over which time it has made 406.8%. All three funds are in the top quintile of their IA Global peer group over the past decade.

The Rathbone fund buys innovative developed-world companies with simple business models that dominate their industries, according to Thomson, while the concentrated portfolio of 40 to 60 holdings is a differentiator from a stock market tracker.

These three quality-growth funds are sit alongside value strategies in the cautious, balanced and aggressive AFI portfolios, with Jupiter Global Value and ES R&M Global Recovery among them.

Both have been among the worst of the peer group over the past three years as the value style has struggled for a number of reasons, including low interest rates, Brexit and the Covid pandemic.

However, all could be considered as barbell options for investors that are concerned that the markets could turn suddenly and these portfolios could return to fashion.

Three income funds also made the list. Synonymous with those in retirement, having a portion of the portfolio that can provide a steady dividend is a valid strategy regardless of risk tolerance.

BNY Mellon Global Income is one of the names on the list. The £3.4bn fund had been run by Nick Clay for around two decades before he left last year. Four new managers have been in charge since and over their tenure the fund has made 20% for investors, a bottom-quartile performance.

Despite the poor 18 months, over the long-term the fund performed well under Clay, making investors 203.2% over 10 years.

Investors will need to decide whether they are willing to give the new managers more time, or whether they move on to a more proven option.

The £98m TB Saracen Global Income & Growth and £2.4bn Fidelity Global Dividend funds round out the income options suitable for investors of all risk tolerances.

All three funds have a higher allocation to Europe (including the UK) than North America, as the dividends from these markets tend to be higher.

Although performance therefore has lagged those of a stock market tracker or growth fund, these portfolios make for a differentiated option and, much like the value funds above, could make for an interesting addition around a ‘core’ passive or growth fund.