Where to safely invest capital.

arjay wrote: I was hoping to draw Jimbo out, with my question: well where do we go from here?

Philrjones wrote:Hi,

Yes I had a few disasterous tenants in the UK after I'd spent a bomb renovating the place only for them to wreck it and the furniture I provided, carpets, bathroom etc. I was paying the real estate agent their fee and they were useless. Didn't make a quid after owning the place for 10 years. Now I live in Australia and have residential property investments here. However as I say I'm getting out of them, to concentrate on managed funds. I've mentioned some of the reasons, but the other is that I really know how to research them. My minimum growth aim is 20% pa, but I always exceed it - and get usually around 30 to 40%pa - every year, and that's with some diversification to minimise risk as well! Even my ING advisor mate here in Oz wants to know how I do that!My pension (superannuation) more or less tracks managed funds (but slightly more conservatively because it's longer term) and so is going very well too. Key reason though is that I will be coming to live in LOS and don't want the hassles that go with offshore property.

Yes his stage of life is important too. I'm not retired so I'm trying to make things grow as fast as possible so I can retire early. However, once I retire I don't want the high risk - none of us should! I'll be looking at a nice steady income stream from a high interest fund, plus a few thousand to invest in a higher risk/return fund to top up the online account. All that is prior to me getting my pension.

All that is ignoring a nice middle road. There are plenty of moderately rated funds earning around the 12 to 18%+ pa mark. Fairly low risk. Possible some of his money could go into those. As an example, if he had 0.5 million and wanted to be safe, he could put 80-90% in the safe income stream fund, 15-5% in a moderate/balanced fund and dabble in a higher risk fund with the rest - use this to top up the safe fund when you can. Other things to consider is the level of interest a person has in investments (seeing as you're doing it yourself) and their experience with investing.

But it's so hard to give advice without talking to the person to acertain all the facts, their risk profile etc. So please don't take what I say as the way to go! Everyone is different and has different needs and different risk tolerances.

Wow, I think I'll come to Udon and set up business doing this!! Or a bar! Actually, last time i was there I was talking with a few people about finance stuff (falangs), so might be a good idea anyway!

Cheers
Phil

Funds for cautious investors

Last Updated: 12:28am GMT 25/01/2008

Stock market shocks this week may cause many people who normally shelter funds from tax each spring in individual savings accounts (Isas) to sit on their hands this year.

Share prices plunged on Tuesday morning before making a partial recovery in what remains the worst-ever start to the year for the FTSE 100 index of Britain's biggest companies.

But financial advisers point out that the annual £7,000 per person Isa allowance expires at midnight on April 5. You cannot go back to make use of previous annual allowances you did not utilise at the time. So it really is a case of 'use it or lose it'.

Cash Isas provide a risk-free option. The Telegraph asked a panel of financial experts which funds they would tip for investors willing to take relatively low risks in pursuit of higher returns than deposits can provide. Then, for the more adventurous, the advisers were asked to tip funds that might benefit a recovery from current setbacks and produce substantial growth - albeit with substantial risks along the way.

For the more cautious investor, Ken Taylor of Mackenzie Taylor Wealth Management suggests M&G Cautious Multi Asset Portfolio and Jupiter Merlin Income.

He said: "Jupiter Merlin Income offers exposure to around 16 funds from nine different fund groups, managed by some of the best asset allocators in the business. This is a true widows and orphans fund, which will deliver a rising income if needed."

Philippa Gee of independent financial adviser (IFA) Torquil Clark said a cautious investor should look to CF Midas Balanced Income: "Unlike their peers who offer numerous funds, Liverpool-based Midas unusually concentrate on just two. For their UK equity exposure, which is currently around 30 per cent, they take the unusual approach of gaining exposure through individual equities, rather than via funds, drawing on their valuable experience. The attraction of doing this is that it lowers the fund's running costs, which in turn reduces the charges passed onto the client."

Ms Gee also rates Newton Phoenix Multi Asset which pursues a diversified asset approach. She said: "This fund will have around one-third invested in each of equities, alternative assets and fixed interest. This has a simple remit to seek capital growth in excess of what you could get from bank deposits."

Gavin Haynes, managing director, Whitechurch Securities said a cautious investor should look to Invesco Perpetual Distribution.

He said: "This fund aims to achieve a balance of income and capital growth through a diversified portfolio of UK equity & fixed interest securities. The fund will aim to invest a minimum of 60 per cent in bonds and 40 per cent in equities."

However, the allocation is flexible and may increase its equity allocation up to a maximum of 60 per cent in exceptional circumstances. The fund was launched in 2004 and managed by the highly rated Neil Woodford, Paul Reed and Paul Causer.

Black Rock Merrill Lynch UK Absolute Alpha was favoured by Mr Haynes who said: "The fund should provide a solid, defensive position in times of stock market volatility, although may lag during times of strong stock market growth. The fund is managed by Mark Lyttleton, who has over 13 years investment experience and also manages the Merrill Lynch UK Dynamic fund."

Darius McDermott of IFAs Chelsea Financial Services recommends Newton Phoenix Multi-Asset. He said: "A new weapon in a retail investor's arsenal to defend against the downturn is the arrival of the multi-asset fund. Previously only the preserve of the very rich or institutional clients, these types of funds offer real diversification – giving retail investors exposure to a mix of uncorrelated assets, including commodities, property, and private equity, in addition to the traditional mix of cash, bonds and equities.

"Given its heavily diversified structure, this fund is unlikely to keep pace with strongly rising equity markets; the fund management team are willing to sacrifice some of the potential returns of equities in order to reduce volatility and lessen risk. Comfortably top quartile last year, the fund is already showing the potential of truly diversified portfolio in limiting downside risk."

HSBC Open Global Distribution Return is also tipped by Mr McDermott for the cautious investor.

He said: "Another fund with capital preservation in mind, this fund aims to lower volatility by spreading the investments globally and through the widest possible range of asset classes available to the manager. As such, there is no bias towards the UK or to stock market based investments. Indeed, the fund emphasises a broad spread of global equities, global fixed income, property, hedge funds, private equity and commodities."

Mark Dampier of IFA Hargreaves Lansdown suggests Merrill Lynch's Absolute Alpha as his first choice for the cautious investor. While he admits that perhaps an equity fund looks like a strange choice given current stock market volatility, he said: "Over the last year it has shown its mettle under fund manager Mark Lyttleton.

"Last year it made 10.5 per cent against the All Share of 5.5 per cent but - perhaps more importantly - has protected clients well in times of market falls. For example, during the year to date, the All Share is down about 8 per cent yet the fund is up over 2 per cent. I believe this fund gives investors a chance to make money in all market conditions."

Artemis Strategic also comes as one of Mr Dampier's top picks. He said: "Bond funds haven't been in favour with investors for some time, yet the environment looks quite reasonable for them.

"The financial crisis has pushed up the price of many investment grade corporate bonds to levels not seen since 2000. However, in a market where there are very different types of fixed interest, I think it pays to buy a fund which acts as a one-stop shop.

"Under James Foster and Alex Ralph the fund can invest in high yield, investment grade corporate bonds, gilts and overseas government bonds. This gives the fund plenty of flexibility but investors should note that it's run on a total return basis, rather than seeking out the highest income. I believe this is an excellent strategy and at the present time the fund yields 6.7 per cent too. Given that interest rates are likely to fall over the next year, I think the background for this fund looks good."

For investors who are willing to take more risk, Mr McDermott suggests Allianz BRIC All-Stars. He said: "This is our preferred BRIC fund which offers investors exposure to all four BRIC markets, but with slightly lower allocation to both China and Russia. It also allows a small proportion of the fund to be invested in other emerging markets. We are confident in the strong team at Allianz and their performance over recent years speaks for itself."

Similarly, addressing adventurous investors, Mr Haynes suggests Jupiter Financial Opportunities managed by Philip Gibb. He said: "In the short-term Gibb is taking a short-term defensive stance during the current volatility and, importantly, he says he has next to no exposure to the sub-prime mortgage crisis.

"Longer term the fund will focus towards themes including worldwide consolidation of the banking and insurance industries and the growth potential of financial services and emerging markets. As this invests in a single sector this a specialist fund however, the fund managers' excellent track record makes it a good choice to get exposure to a stock market sector with strong recovery potential."

Ms Gee added: "New Star Tactical Portfolio is the most adventurous fund within their fund-of-fund range, and an ideal one to use if you are looking to out-source the management of more esoteric investments. Some of the funds held are well off the radar for most investors, and infrequently used by other fund managers, indicating a willingness of Mark Harris to consider funds others are barely even aware of."

Mr McDermott tipped Elena Shaftan's Jupiter Emerging European Opportunities for an investor willing to accept higher risks in pursuit of higher returns.

He said: "The fund invests in the securities of European companies and in sectors or geographical areas which are considered by Ms Shaftan to offer good prospects for capital growth, taking into account economic trends and business development. She recently increased the £600m fund's weighting in Russia by 50 per cent to 60 per cent , saying the impact of the sub-prime fall-out should have a negligible effect on the country."

For those seeking capital growth, Mr Taylor favours Neptune Russia and Jupiter Global Managed.

He said "The Neptune fund is run by the extremely talented Robin Geffen and this is an extremely focused fund with around 35 stocks, offering significant growth prospects. With volatility assured, but taking the longer view, there could be tremendous rewards to by had from this country.

"Jupiter Global Managed will represent the best ideas from various managers at Jupiter rather than seek exposure to a single country. Run by the gifted John Chatfeild Roberts, this will again carry volatility, but the track record is strong and I would expect good numbers from the fund going forward."

Mr Haynes and Ms Gee also said Russia is well positioned to exploit the current and future global economic climate and tipped Neptune Russia Unit Trust for the risk-taking investor.

Mr Dampier agreed. He said: "International investors shunned Russia last year, perhaps because of Putin's somewhat aggressive stance.

"However, the irony is that the Russian political scene is probably the most stable of all emerging markets. Putin is loved by many fellow Russians for bringing economic success.

"The middle class now account for some 21 per cent of the population and this is feeding domestic demand. So, in Russia, we have both an oil/commodity story and an internal demand story. With Russian shares priced around 10 times earnings and relatively immune from the financial credit crunch this remains my favourite mar