It is a confusing time to be an investor. Stock markets are soaring one day and crashing the next; major global companies are going bust while others are reporting record profits.
So what should people do? We asked a string of leading fund managers and financial advisers where they have been putting their own personal cash over the past few months and how they plan to invest during the rest of 2009.
The results illustrate the vast array of different strategies being pursued. While some are investing everything into equities, others are opting for corporate bonds or gold. A number are even planning to start investing back into commercial property.
Robert Guy, financial adviser at Timothy James & Partners
Robert Guy has been buying equities for most of this year because markets had become so cheap. He has been focusing on general European and Global funds, and tends to look for managers with good track records.
"I'm about 45 per cent invested in the UK and 55 per cent overseas," he says. "I have been buying Schroder UK Alpha Plus, Invesco Perpetual High Income, Neptune Global Alpha and M&G Global Basics."
By the middle of this summer he thinks he will be considering re-entering commercial property through a fund that invests in actual bricks and mortar, rather than property shares.
T om Caddick, manager of the LV= Balanced Managed Fund
As someone with an investment horizon of more than a decade, Tom Caddick is substantially invested in equities and has been putting his money in the LV=Balanced Managed Fund that he runs.
"I've increased my investment-grade corporate bond exposure," he says. "Equities represent a stronger return profile over the longer term at these levels, but on a risk-return basis, investment grade looks extremely attractive."
Separately, Mr Caddick is also moving up the property ladder. "It should not be seen as an investment, but prices have corrected to a degree which represents a longer-term opportunity."
Charlie Morris, head of absolute return at HSBC Global Asset Management
The best way to invest during this "truly awful macro-economic situation" is by splitting your portfolio into three, suggests Charlie Morris. "You have one third doing absolutely nothing, one third buying things that are dirt cheap and one third in high conviction trades," he says. "For me, the high conviction trade is gold bullion."
Mr Morris prefers to buy actual gold rather than opting for a specialist fund that invests in mining shares. "You get more liquidity and less volatility by owning gold bullion," he says.
Andrew Merricks, head of investments at Skerritt Consultants
Andrew Merricks is steering clear of equities. "I am still very suspicious of them and the bounce we have recently seen in markets," he says. "I don't trust the financial institutions saying they are OK because I don't think they can know that yet."
Instead, he has been buying gold but has decided to get exposure through an Exchange Traded Fund (ETF). "Gold is an asset that tends to hold its value during turbulent times." He also likes corporate bonds. "I have the Legal & General Dynamic Bond fund, as well as M&G Strategic Corporate Bond Fund and M&G Optimal Income," he adds.
Colin Morton, manager of Rensburg UK Equity Income Trust and UK Blue Chip Growth trust
The recent sale of a property provided Colin Morton with some cash which he has invested into the Rensburg UK Equity Income Trust that he runs. "I've got a significant amount of my wealth in equities at the moment, as well as some in savings and deposit accounts," he says. The attraction of equity income is the yield on offer. "I was getting just over 6 per cent on the fund which was significantly higher than I could get on either bonds or cash," he explains.
Darius McDermott, managing director of Chelsea Financial Services
Having a tracker mortgage has released some extra money each month for Darius McDermott to add to his investments, he says. He's investing particularly as cash is offering very little in the way of interest at the moment.
"I still like the Legal and General Dynamic Bond fund and the recently launched BlackRock European Absolute Alpha run by Vincent Devlin who is excellent," he says.
"I have also added to my Allianz BRIC Stars weighting as emerging markets have been outperforming Western markets."
However, he remains cautious. "I expect markets to continue to be volatile so I'm going to be very careful with my timing," he says.
Malcolm Cuthbert, partner at Killik & Co
Although he has been heavily weighted in cash since coming out of commercial property a couple of years ago, Malcolm Cuthbert does have a mixture of investment trusts in both his ISA and his SIPP. "I have the British Empire Securities & General Trust which has got excellent past performance, is well diversified and run by trusted investment managers," he explains. "I've also gone for something more adventurous in the SIPP such as JPMorgan Chinese Investment Trust as I feel China is a good long-term story."
He also plans to look again at commercial property. "Yields are back at between 6 and 8 per cent for very good tenants on long leases," he says.
Gavin Oldham, chief executive of The Share Centre
Gavin Oldham is a fan of solid, income shares. "A number of companies are paying quite good yields, although you have to be discriminating," he says. "You get the prospect of a reasonable income and hopefully some capital gain."
He cites oil giant BP as a potentially good earner for the future. Within funds, he likes Invesco Perpetual High Income and Newton Global Higher Income.
"I know the market has had a relatively strong run during early April but we're not yet completely out of the woods," he adds. "My approach is to feed money into the market and take advantage of Pound Cost Averaging."
Richard Philbin, Chief Investment Officer, Architas Multi-Manager Limited
Every penny of the money Richard Philbin invests goes into equities. "I'm investing for the long term so the vast majority is in higher-risk strategies," he says. "My current portfolios are in emerging markets, higher-risk UK equities and technology."
The funds he has bought so far include Henderson Global Technology and Aberdeen Emerging Markets.
Mr Philbin also plans to put money into the Artemis Strategic Assets Fund which is due to be launched in May. "It will be a go-anywhere, do-anything sort of fund," he adds. "For me, it's likely to be a good diversifier for my existing portfolios."
Ben Yearsley, an investment manager at Hargreaves Lansdown
Ben Yearsley has a combination of longer-term holdings such as absolute return funds, and short-term strategic plays such as bonds.
"Last week I bought into the brand new First State Latin America Fund as they seem quite positive on the prospects for that region," he says. "I thought I could afford to have a bit of risk in my portfolio and I also like the First State team."
Elsewhere, he has added to his holding in the Gartmore European Absolute Return Fund. "I like the idea of having the core of my portfolio in absolute return and equity income because they should be able to perform in any market conditions."
Bryan Collings, lead manager on the HEXAM Global Emerging Markets Fund
There are plenty of reasons for investors to be positive on the prospects for global emerging markets, says Bryan Collings.
"Superior growth prospects will result in more sustainable and higher returns on capital which are the key drivers of share prices," he says. "Little debt will also lead to higher cash flow and more dividends."
In particular, he has been putting his money into China and Russia. "While growth is slowing in China it is still at a premium to what is happening globally and there will be pockets within the economy that will exceed 10 per cent," he explains. "Russia, meanwhile, is among the best performing markets year to date."
Geoff Penrice, an adviser at Bates Investment Services
Geoff Penrice is investing in a mix of shares and fixed-interest and commodity funds, but is steering clear of property for the time being.
"I believe markets have switched from being overly optimistic to being overly pessimistic," he says. "There will be bargains to be had for the more astute fund managers. I am investing in funds such as the M&G Strategic Bond Fund, Fidelity Special Situations Fund for equities and JPM Natural Resources.
"Because I am investing primarily for long-term growth I feel I can be relatively adventurous," he adds. "The main change will be when I feel it is right to move some of my allocation into property."
Andy Gadd, head of research at Lighthouse Group
Andy Gadd is a long-term investor who is willing to ride out the ups and down of the market but looks for value and tax efficiency when investing.
"I have been buying fixed interest as they offer great value and there is the added advantage that as a higher-rate taxpayer I receive maximum tax efficiency from my ISA," he explains.
"In my SIPP I have continued to add to my holdings in the UK equity income sector and I have purchased a couple of specialist investment trusts over the last year."
His holdings include the Artemis Income Fund and the M&G Strategic Corporate Bond Fund.
To find an independent financial adviser in your area, visit www.unbiased.co.ukReuse content