We asked some of our freelance writers to reveal their top-rated investment funds for 2023. Here’s what they chose!
Sanlam Global Artificial Intelligence Fund
What it does: Sanlam Global Artificial Intelligence Fund aims to provide long-term capital growth through diversified exposure to companies involved in artificial intelligence.
By Paul Summers. I reckon artificial intelligence (AI) is likely to be one of the most significant/lucrative investment themes of the next decade and beyond. That’s why I’ve been gradually adding to my stake in this specialised fund from Sanlam over 2022. My plan is to continue doing so in 2023, especially with stocks being so out of favour. “Be greedy when others are fearful,” as Warren Buffett puts it.
The Sanlam fund invests in companies that are engaged in research and development and/or the provision of services connected with artificial intelligence. These include Alphabet, Tesla and UnitedHealth Group.
With only 37 holdings in the portfolio, this is unlikely to be the smoothest of rides for investors. However, one only needs to look at the returns so far to see how this concentration can pay off.
Although past performance is no guide to the future, the Sanlam fund has delivered 16.3% annualised since inception. This makes the 0.5% ongoing fee look very reasonable, in my opinion.
Paul Summers owns shares in Sanlam Global Artificial Intelligence Fund.
iShares Global Clean Energy ETF
What it does: iShares Global Clean Energy ETF invests in green technology manufacturers and low-carbon energy producers.
By Royston Wild. A growing global population means energy consumption is also steadily rising. Yet the future role of fossil fuels in addressing this increased demand is set to diminish as countries seek to reduce their carbon emissions.
This leaves huge potential for funds that invest in renewable energy stocks and green technology. The iShares Global Clean Energy ETF (LSE: INRG) is one such investment fund I think could thrive in 2023 and beyond.
This exchange-traded fund has more than $6.3bn invested in around 100 companies. These businesses are located in both developed and emerging regions, too, giving the fund added strength through geographical diversification.
iShares Global Clean Energy’s largest holding is Enphase Energy, a business that builds microinverters, batteries and other hardware for solar systems used on homes. It also owns stakes in clean energy producers like Spain’s Iberdrola and Danish offshore wind specialist Orsted.
The fund’s returns could suffer if unfavourable weather conditions hit renewable energy production. But on balance I think this ETF might prove an exceptional long-term investment.
Royston Wild does not own shares in iShares Global Clean Energy.
James J. McCombie: Fidelity Special Situations Fund
What it does: This is an active and discretionally managed UK-focused contrarian value equity fund with a small-cap bias.
By James J. McCombie. Following the investing principles of legendary fund manager Anthony Bolton, the Fidelity Special Situations Fund is managed with a contrarian value approach. Unloved companies, whose future earnings prospects are deemed to be greater than the markets’ pessimistic view of them, are the order of the day.
Falling into value traps is a concern. The strategy relies on seeing operational and performance changes ahead of the market or forecasting a change of sentiment. But sometimes the market is not wrong, and shares are cheap precisely because they should be. However, the 10-year annualised return is 7.5% and the fund has outperformed its FTSE All-Share benchmark, suggesting the managers have not sprung too many traps.
With many investors showing a bias to growth, either wittingly or unwittingly, this value fund offers style diversification. In addition, there is a small-cap bias, offering size diversification to large-cap focused investors.
James J. McCombie does not have a position in the Fidelity Special Situations Fund
FTF Martin Currie UK Rising Dividends
What it does: This is a UK-focused fund, which invests in stocks that are increasing their dividend payments.
By Edward Sheldon, CFA. Dividend stocks were one of the best-performing areas of the stock market in 2022, and I reckon they’re likely to continue outperforming in the near term. Therefore, I’ve selected FTF Martin Currie UK Rising Dividends as my top fund for 2023.
What I like about this fund is that it focuses on companies that are growing their dividend payouts. This is a smart strategy, in my view. Generally speaking, companies that raise their dividends continually tend to produce strong total returns (capital gains plus dividends) over time.
I also like the fact that the fund owns plenty of high-quality companies. Names in the top 10 holdings at 31 October included Unilever, Diageo, and Experian.
One downside to this fund is that it only invests in UK stocks. So, it’s not fully diversified geographically.
Overall though, I see it as a solid investment fund for 2023. Fees are low at 0.54% per year (through Hargreaves Lansdown).
Edward Sheldon owns shares in Unilever, Diageo, Experian, and Hargreaves Lansdown
