UK stocks pay off for TB Wise

Returning 40.24 per cent in the past three years, the £54.2m portfolio has a 47 per cent UK equity exposure – 38.3 per cent in shares and 8.8 per cent in funds, according to its latest factsheet. By contrast, the 119-strong sector returned 20.69 per cent.

Property is the next biggest asset class in the portfolio, with a 10.7 per cent exposure. Its second largest holding Picton Property, at 6 per cent, reported a 3.4 per cent increase in its NAV for the second quarter of the year.

The remaining 40.3 per cent is spread across global and specialist equities, private equity and fixed interest bonds, with 5.1 per cent in cash and income.

The portfolio’s forward yield is 4.9 per cent, as at 31 July, however when fully invested, the income yield is expected to be around 5.1 per cent.

Fund manager Tony Yarrow has been at the helm since the portfolio’s inception in 2005. The experienced manager has outperformed the peer group more often than not, according to FE, and focuses on high-quality assets in out-of-favour areas.

The objective of the portfolio is to provide a starting income comparable with a good building society account and income and capital growth over time, with a quarterly dividend distribution.

Among the other top holdings are the Princess Private Equity Fund, at 6.2 per cent; Murray International Trust, at 5 per cent; and the JO Hambro UK Equity Fund, at 4.9 per cent, according to FE.

The minimum investment is £1,000, and the ongoing charge is 1.98 per cent.

In the same peer group, the Thesis iFunds Spectrum Indigo Fund has lagged behind the sector in the past three years, returning 12.34 per cent, according to FE, placing it 98th in the sector.

The £3.7m portfolio seeks to generate a total return from income and capital growth using a relatively conservative policy, according to its latest factsheet.

It also seeks to achieve the returns historically produced by corporate bonds at the level of risk associated with bond price performance.

The portfolio seeks to achieve its objectives by investing in exchange traded funds, exchange traded commodities and other regulated collective schemes – which can include transferable securities, money market instruments, deposits and cash – according to its factsheet.

Between October 2014 and March this year, fund managers Stacey Ash and Nigel Baynes have steadily reduced exposure to government bonds to zero, choosing instead to hold cash, the fund’s largest holding, at 67.4 per cent as at 31 July 2015.

In July, the fund managers sold out of its emerging market equity, Japanese large cap and European large cap and mid cap equity positions following losses. Some of the proceeds were used to open a short position in gilts in mid-July.

The portfolio continues to maintain an exposure to European and UK small and mid caps as well as Japanese small caps.

After cash, its top holdings include DB x-trackers UK Gilts Short ETF, at 8 per cent; iShares FTSE 250 ETF, at 6 per cent; and iShares MSCI Japan Small Cap ETF, at 5 per cent.

The minimum investment is £5,000 and the ongoing charge is 3.15 per cent.

ADVISER SAYS...

Alex Reynolds, financial adviser at London-based Advies Private Clients, said: “In terms of the parameters and quantitative analysis the TB Wise Income fund is a top-managed fund and ticks all the boxes in terms of performance, volatility and general risk ratios. It has a good UK equity weighting, and property has been doing well. It has 4.3 per cent in fixed interest. Many people are moving away from fixed interest because of issues with liquidity, which I can understand.

“When looking at managed funds it depends on the parameters. I would not be happy if a client had been in a fund which has 67 per cent in cash (as the Thesis fund has) – advisers have to ensure an investment is fit for purpose if picking funds for clients, so the Thesis fund should ring alarm bells.”