We asked some of our freelance writers to reveal their top-rated investment funds for February.
Morgan Stanley Global Brands
What it does: Morgan Stanley Global Brands invests in firms who products and services command excellent customer loyalty.
By Royston Wild. Inflation is expected to have peaked in many regions. Yet the retracement to more normalised levels is predicted to be a long slog. As a consequence, I think the Morgan Stanley Global Brands fund could be a great buy.
As its name implies, this investment fund focuses on companies who products and services enjoy terrific brand power. Software creator Microsoft and household goods manufacturer Reckitt count among its major holdings.
Businesses with beloved brands benefit from supreme pricing power. They can raise the prices of what they produce without facing a significant drop-off in demand. This is important as it allows them to effectively pass on higher costs to the consumer.
The Morgan Stanley Global Brands spans a variety of sectors including information technology, consumer goods and healthcare. It also allocates capital across multiple geographies, albeit with a large focus on the US. This diversified approach helps to spread the risk for investors.
Royston Wild does not have a position in the Morgan Stanley Global Brands fund or in any share mentioned here.
Ninety One Global Gold
What it does: Ninety One Global Gold invests primarily in the shares of companies around the world involved in gold mining.
By G A Chester. I believe gold is a good hedge for periods of financial and political uncertainty. Unlike gold itself, many of the companies that mine it pay dividends. There are operational risks with miners, but I reckon the income provides some compensation.
With only a handful of gold miners listed on the London Stock Exchange, I see greater attraction in the broader portfolio (around 25 holdings) of the Ninety One Global Gold fund.
The investment fund is managed by a highly experienced metals and mining specialist. And it has an excellent record since its launch in 2006. I put this down to its selective focus on miners capable of delivering superior returns on capital and free cash flow generation through the commodity cycle.
Ninety One Global Gold is my top fund pick right now both for its immediate prospects in the current uncertain world and its excellent long-term record in the ‘safe haven sector’.
G A Chester has no position in Ninety One Global Gold or London Stock Exchange.
Royal London Sustainable Leaders
What it does: Royal London Sustainable Leaders is a UK equity fund that aims to invest in companies that are making a positive contribution to society.
By Edward Sheldon, CFA. There’s a lot to like about Royal London Sustainable Leaders, in my view.
The fund owns some fantastic UK stocks, for a start. At the end of November 2022, the top 10 holdings included AstraZeneca, London Stock Exchange Group, Experian, and Prudential. These are all high-quality companies with a lot of potential.
Meanwhile, long-term performance has been excellent. For the five years to the end of November, the fund beat its benchmark, the FTSE All-Share index, by over 4% per year.
A third reason I like it is that it has the flexibility to invest a little bit of its capital outside the London Stock Exchange. This opens up a whole new world of investment opportunities.
It’s worth noting that this investment fund isn’t the cheapest around. Fees are currently 0.76% through Hargreaves Lansdown. I think the strong performance track record here justifies the fee, however.
Edward Sheldon owns shares in Experian, Prudential, and Hargreaves Lansdown.
Sanlam Global Artificial Intelligence Fund
What it does: Sanlam Global Artificial Intelligence Fund invests in companies harnessing AI to create long-term capital growth.
By Ben McPoland. We glimpsed the disruptive potential of artificial intelligence (AI) recently when AI-powered chatbot ChatGPT was released to the public. It delivers direct answers instantly, without the need for endless pages and links. This reportedly provoked Google management to declare a ‘code red’ alert.
It now seems likely that AI is going to be one of the biggest mega-trends of this century. One way to gain exposure to this theme is through the Sanlam Global Artificial Intelligence Fund.
The investment fund’s top two holdings are Google-parent Alphabet and Microsoft, which is investing billions in OpenAI, the owner of ChatGPT. I like that this fund is diversified beyond big tech, though. The portfolio also includes health insurer UnitedHealth Group and oilfield services firm Halliburton.
One risk worth noting here is the concentrated portfolio of only 37 holdings. This may cause a degree of volatility in the daily fund price. There is a 0.5% ongoing fee.
Ben McPoland does not own shares in Sanlam Global Artificial Intelligence Fund.
Scottish Mortgage Investment Trust
What it does: Scottish Mortgage Investment Trust is a fund run by Baillie Gifford, promising a healthy return from a five-year investment.
By John Choong. The highs that Scottish Mortgage Investment Trust (LSE:SMT) experienced during the pandemic were written off last year as its tech-heavy portfolio got hit by rising interest rates and an underperforming Chinese stock market. Consequently, Scottish Mortgage’s shares lost almost half their value.
Nonetheless, a reshuffling of its portfolio to limit its exposure to risky Chinese equities should help its shares recover in a more stable manner in 2023. And with the Federal Reserve on the verge of pausing its hiking cycle, a further move upwards is very much possible. After all, the fund’s stock is already up by more than 5% this year, outperforming the S&P 500 slightly.
More lucratively, it’s worth noting that Scottish Mortgage is currently trading slightly below its net asset value. This could indicate a bargain if I were to buy at its current price, especially when considering its high upside potential.
John Choong has no position in any of the shares mentioned.
