My investments are a mix of funds, shares and investment trusts and I find them hard to keep track of. With markets moving fast and a constant stream of news, what do I need to consider to make sure my investments are diversified and keep up?
This is Money replies: The events of the past five years have kept investors on their toes and the pace of news shows no sign of slowing down.
Since 2020, investors have dealt with the Covid 19 pandemic and its lockdowns, the cost of living crisis, interest rates spiking, and changes of government around the world.
The return of Donald Trump as US President, with his determination to immediately disrupt the global political and economic order, has only hastened and intensified the newsflow.
For example, investors in global markets are attempting to ascertain what his tariffs mean for trade and inflation, while also weighing up the effects of his geopolitical moves, and what attempts to slash US domestic government spending will do to the American economy.
The return of Donald Trump as US President has sped up the news cycle further
The market ups and downs delivered by turbulent times can be unsettling and with so much information available, it is natural to be concerned and wonder if your investment portfolio is positioned right.
Investors need to think long term and diversification can be a powerful way to manage risk, while making sure you are open to growth opportunities.
Diversification essentially means avoiding putting all your eggs in one basket. By investing across different regions, sectors and asset classes you can spread both your risk and opportunity for gains.
F&C Investment Trust has invested globally for 150 years, adapting to market changes while maintaining a strong track record.
We asked F&C Investment Trust fund manager Paul Niven for his thoughts on how to deal with fluctuating markets and be diversified.
Paul Niven says: ‘Our investment process captures a diversified range of listed and private market opportunities. We aim to build a resilient portfolio that can perform in different market conditions
‘We construct our portfolio to provide sectoral diversification, ensuring that no single industry dominates our holdings. This helps to balance risk and take advantage of different economic cycles.’
Paul Niven, fund manager of F&C Investment Trust
No single country or region always does best
The US stock market has dominated global returns over recent years, but over the medium and longer term no single country or region consistently leads market performance.
Investing globally helps to mitigate country-specific risks. By spreading investments across multiple regions, investors can benefit from different growth cycles and economic conditions.
As an actively managed investment trust, F&C can adjust its portfolio based on economic trends, company performance, and market sentiment, rather than simply tracking an index.
This means that it can adapt to new opportunities while managing risks effectively. For example, in recent years, F&C has adjusted its exposure to smaller companies and different market segments based on changing conditions.
Paul Niven says: ‘Global diversification is a core part of our strategy. We invest across Europe, North America, and emerging markets, reducing exposure to any single economy while capturing opportunities worldwide.
‘We analyse the economic and market backdrop, taking into account factors such as valuations and investor sentiment.
‘By actively managing our allocations, we aim to reduce the risk of underperformance while enhancing returns.’
How F&C Investment Trust invests around the world
How F&C Investment Trust invests in different sectors
The 20 biggest holdings in F&C Investment Trust by portfolio size
Why investing around the world pays off
As well as spreading risk, investing globally delivers a broad opportunity to profit from the best companies, whichever country they are based in. This reduces exposure to an individual market’s fortunes and offers exposure to long-term growth trends.
F&C Investment Trust invests across the world, holding shares in carefully selected companies across various industries and regions.
Paul Niven says: ‘We focus on global growth assets and invest predominantly in listed equity. Less than 10 per cent of our investments are in the UK, meaning our investors benefit from opportunities across Europe, the US, and beyond.’
Investing in private companies
Beyond public listed shares, F&C Investment Trust also has exposure to private equity investments, which provides access to companies that aren’t publicly traded but offer long-term growth potential.
Investing in private equity can offer unique opportunities for portfolio diversification and potential returns. F&C incorporates robust, well-managed private equity investments into its investment strategy.
This can lead to potential benefits including:
• Early-stage growth: Investing in emerging companies with high growth potential.
• Long-term value creation: Focusing on strategies that may yield substantial returns over time.
By integrating private equity into its portfolio, F&C Investment Trust seeks to capitalise on these potential benefits by offering investors access to this asset class within a well-managed framework.
Paul Niven says: ‘We expect private equity to account for between 5 to 15 per cent of our assets, adding another layer of diversification.’
F&C Investment Trust
In a fast-moving world, it’s natural to feel uncertain about investments. Diversification is a key tool for managing risk, and F&C Investment Trust’s global, sector-diverse, actively managed, and income-generating approach could be the right choice for those seeking long-term growth.
Paul Niven says: ‘We feel we are exceptionally well-placed to continue delivering strong returns for shareholders into the future.’
F&C Investment Trust’s share price has climbed over the past ten years
With a history dating back to 1868, F&C Investment Trust is the world’s oldest collective investment fund. It offers a long-term approach backed by experience.
The trust is also part of the FTSE 100 index, demonstrating its scale and prominence in the UK investment landscape. Today, it manages over £6.5 billion in assets, investing in a mix of listed equities, private equity, and third-party-managed funds to build a well-rounded portfolio.
For investors seeking income, F&C Investment Trust has a remarkable track record – it has increased its dividend payments every year for 53 consecutive years.
While dividends are never guaranteed, this consistency reflects the trust’s ability to generate reliable reliable income for its investors over the long term.
Important information:
Your capital is at risk.
*There is no guarantee that dividends will continue to increase.
This material should not be considered as an offer, solicitation, advice or an investment recommendation. This communication is valid at the date of publication and may be subject to change without notice.
Issued by Columbia Threadneedle Management Limited, No. 517895, registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority. Approved as at [Date of Compliance Approval].