My Comments: There is a lot of fear these days about money. We all know that from time to time the markets experience a correction. Depending on how old you are and when you expect to use the funds you have, this fear is normal.
So how do you deal with it? Again, depending on your age and attitude about investment risk, you turn either to a trusted third party to make those decisions for you or you figure it out on your own. Or a little of both.
As a professional retirement income planner, I’ve got some experience with this question. But like everything else in life, I can only make an informed guess about the future. Here are some suggestions for you to consider.
By James Connington / Jun 26, 2017
With markets at all-time highs, investors are sitting on cash and struggling to decide how to use it.
The fear is that they will be investing at the worst possible moment, and face seeing investment values plunge if and when the market takes a downturn.
In Britain, seemingly unending political turmoil has been accompanied by a meteoric rise in the FTSE 100 index that many worry can’t continue.
When it comes to the US, neither active funds – which mainly fail to beat the market over any meaningful time period – or buying the incredibly expensive market, via an index tracker fund, look like appealing options.
Telegraph Money spoke to a selection of fund managers to help narrow some options that still offer a good balance between risk and reward.
All of these managers run multi-asset or multi-manager funds – all-in-one portfolios that contain a mix of shares, bonds, funds or other assets from a variety of sectors.
In theory, this should minimise the bias to a particular asset or region specialist managers may fall victim to.
Their picks include investment trusts specialising in property, European and Asian stocks, and the US energy sector.
Jacob Vijverberg, Kames Capital
Mr Vijverberg said he is less comfortable with assets that are dependent on earnings growth, such as regular stocks, because he thinks earnings expectations are too high.
Instead he highlighted global real estate investment trusts (Reits) as offering a good risk-reward balance.
A Reit is a listed company that owns and runs buildings to generate an income for investors.
Mr Vijverberg said: “We expect rates to stay low in the developed world, meanings Reits can continue borrowing cheaply. Additionally, rental contracts are generally linked to inflation, offering guaranteed income increases.”
He favours Reits that own properties used for logistical or industrial purposes, or hotels, rather than residential buildings.
In its multi-asset funds, Kames holds Tritax Big Box; this Reit invests in large warehouses and logistics facilities in Britain used by retailers such as Amazon. It charges 1pc.
Late last year, the Kames multi-asset team increased its investment in American Reits too, including Welltower, which invests in care homes and health facilities.
Welltower is listed on the New York Stock Exchange and is a part of the S&P 500 index. British investors should be able to access it via “fund shops” that offer international share dealing such as Hargreaves Lansdown and TD Direct.
John Husselbee, head of multi-asset at Liontrust
Mr Husselbee said that while stock markets continue to “shrug off” political events, “it’s hard to point to any sector that screams real value on a short to medium term view”.
He explained that diversification is therefore more important than usual, and so the best risk-reward proposition at present “lies in the developing markets of the Asia Pacific (excluding Japan) and emerging markets sectors”.
For Asia Pacific specifically, he said the region offers an “attractive and diversified dividend income”, which has value given many investors’ desperate hunt for income producing investments.
He highlighted Schroder Asian Income as one way to gain exposure, as it “provides a degree of safety in what can be a volatile market”. The fund charges 0.93pc and yields 3.5pc.
In the wider emerging markets sector, Mr Husselbee recommended Stewart Investors Global Emerging Markets Leaders. The fund charges 0.92pc.
Marcus Brookes, head of multi-manager investing at Schroders
Mr Brookes said European and Japanese stock markets offer better value than the US market at the moment.
This, he explained, is largely due to the lower valuations on offer, but also due to concerns that US company margins and sales “could be peaking”.
He said this would be a “worrying condition should the US experience an economic misstep”.
He explained: “In Europe and Japan we find relatively attractive valuations combined with margins and sales that are far from their peak.”
In his popular Schroder Multi Manager Diversity fund, Mr Brookes has around 6pc invested in the TM Sanditon European Select fund, and 4pc in the Man GLG Japan Core Alpha fund.
These charge 1.16pc and 0.9pc respectively.
Bill McQuaker, Fidelity
The US is the world’s biggest market, yet not all of its component sectors have been doing as well as the overall market.
Mr McQuaker picked out the energy sector as offering an investment opportunity.
He said: “The energy sector is down by around 20pc relative to the S&P 500 over the year to date, and would benefit from any rally in the oil price.”
This is something he views as likely due to global oil cartel OPEC’s extended production cuts, and the “overestimated” impact of US shale oil production on the global price of oil.
If you want to buy the whole US energy sector, BlackRock offers its iShares S&P 500 Energy Sector “exchange traded fund”.
The charge is 0.15pc, to track an index comprised of the S&P 500 stocks categorised as energy companies. Exxon Mobil and Chevron account for more than 40pc of the index.
The other option is a global energy fund that invests heavily in the US. Guinness Global Energy is often tipped by experts Telegraph Money speaks to. It is around half invested in the US, and charges 1.24pc.
Artemis Global Energy, Investec Global Energy and Schroder Global Energy are all between 40pc and 60pc US invested too.