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Our Funds to Watch Autumn Conference returns to Claridges in London on the 14th – 15th November 2019.

Investment Week is delighted to announce the annual Investment Company of the Year Awards 2019. Taking place on Wednesday 20th November at the Sheraton Park Lane.

The Gold Standard Awards have been recognising higher standards in Financial Services for the past 17 years. These awards are one of the toughest financial services awards to achieve, which also makes them highly respected.

The Sustainable & ESG Investment Conference returns on Friday 22nd November 2019.

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In this exclusive magazine exploring the evolution of quality and income ETF strategies, King reveals that each ETF follows an investment strategy developed by the groups in-house research team that leverages fundamental active insights to inform the factor definitions and applies portfolio construction principles to mitigate the unintended biases.

David Cumming, Aviva Investors chief investment officer for equities, last year witnessed turbulent times for UK equities but he remains positive about the market in which he has a personal as well as a professional stake.

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Ben Willis, head of portfolio management at Chase de Vere, tells Lauren Mason which three funds in the IA Targeted Absolute Return or risk-adjusted sectors he uses for downside protection, and why he trusts them more than behemoths such as Standard Life GARS and Invesco Global Targeted Returns.

While investors are often deterred by some of the IA Targeted Absolute Return sectors volatility spikes and lacklustre returns from some of its larger funds, there are still highly attractive diversification benefits and downside protection to be found within it, according to Chase de Veres Ben Willis.

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The head of portfolio management maintains what he describes as a high weighting to so-called alternatives across the firms cautious and balanced portfolios, given how volatile both equities and fixed income investments have been recently.

However, he warned that investors need to tread carefully to avoid opaque funds, those that have struggled during previous market downturns and those with too many complicated mechanisms – otherwise, reasons for underperformance or outperformance will

When we talk about our use of alternatives, were talking multi-asset strategies or absolute return-type funds. But really, what we want from those is for them to be boring, consistent grinders that are not going to be volatile, and are not going to lose you money, Willis explained.

Vehicles such as [Standard Life] GARS, or Invesco GTR [Global Targeted Returns], which we have held in the past, are great when they get it right. But when they get it wrong, the drawdowns can be quite severe.

We get that from equities – we do not need that or want that from our alternatives.

As such, the head of portfolio management said he is choosing portfolios that are really very boring, have a proven long-term track record during down markets and which are predominantly long-only, and therefore not too complex.

They are steady Eddies. If you have a high appetite for risk, these funds will not excite you. You would not even give them a second look. But if you want something to protect you on the downside, they are great investments.

Here,Investment Weekshines a spotlight on Williss three favoured steady Eddies: Investec Diversified Income, BNY Mellon Global Dynamic Bond and Church House Tenax Absolute Return Strategies.

Made available to retail investors in March 2008, but having been offered to institutional investors since 1994, Willis said the 1.3bn Investec Diversified Income fund has an enviable track record.

Investec is primarily an income-producing fund, which we therefore use in our income portfolios, he said.

The team – led by John Stopford – pays close attention to volatility and they have done a good job through several market cycles.

We are confident they can continue that, all while giving a nice yield. And Stopford has a pedigree in fixed interest, so you can rely on him to make asset class calls and defend capital.

Over five years, the fund has returned 19.8% with two-thirds less annualised volatility than, simply as a point of comparison, the equity-only FTSE All-Share index, according to FE data.

It also has a maximum drawdown, which measures the most money lost had investors bought and sold at the worst possible times, of 4% over the same time frame. It yields 4.2%.

The 2.2bn BNY Mellon Global Dynamic Bond fund, which adopts a team-based approach to management, was the most recent addition to Chase De Veres discretionary managed portfolios.

You could argue the team is not dissimilar from what the Investec team is trying to do, although it runs it on a total return basis so income is less of a focus, said Willis.

The portfolio is run on a thematic basis and, while it is not focused on dividend yield pay-out, it does still offer a yield.

Again, the fund has been up and running since 2004, so you have plenty of volatile periods of time over which you can check the performance and see that it has done what it was supposed to do.

2008 was probably its worst year, but relative to other assets and other funds, it held up extremely well.

The fund, which holds a mixture of government bonds, investment-grade corporates, high yield and convertible bonds, also has a small weighting to derivatives for downside protection.

It has just one-sixth of the volatility of the FTSE All-Share over five years, a maximum drawdown of 2.2%, and a total return of 9.3%. It yields 2.1%.

With a much smaller AUM of 408m, Jeremy Wharton and James Mahons Church House Tenax Absolute Return Strategies fund has been running since 2007.

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While the Newton fund invests in bonds, Church House can invest in equities as well and has a lot of flexibility in terms of asset class, Willis continued.

If they like equities, for instance, they can start building positions in equities, but they are not going to be an equity fund – theyre trying to protect client capital. Theyre very transparent with what they are holding in their portfolio.

For instance, one of the biggest asset class weightings in the fund is currently AAA-rated floating rate notes, at 44.2%.

Over five years, the fund has returned 15.06% with a maximum drawdown of 2.2%.

It has been less than one-quarter as volatile as the FTSE All-Share index.

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