History shows that buying stocks during periods of market weakness can be a profitable move in the long run. As such, I’ve taken the opportunity to add to a few of my investment funds in recent weeks as the stock market has fallen. Here’s a look at three funds I’ve added to so far.
Franklin UK Rising Dividends
In order to take advantage of recent FTSE 100 weakness, I’ve added to my position in the Franklin UK Rising Dividends fund. This is an under-the-radar fund that has a focus on high-quality UK dividend payers. It aims to provide both capital growth and a rising level of income over time. It has a solid performance track record with a five-year return of about 27% versus around 14% for a FTSE 100 index tracker. And it is available on the Hargreaves Lansdown platform with a very reasonable annual fee of just 0.55%.
Top holdings in this fund currently include Unilever, Royal Dutch Shell, Diageo, Relx and GlaxoSmithKline. All of them have fallen in the recent stock market decline. So, by putting money into this fund now, I’m effectively increasing my exposure to these FTSE 100 names at lower prices.
I’ve also been adding to my favourite investment fund Fundsmith in recent weeks. This is a concentrated global equity fund that focuses on high-quality, resilient companies. It’s managed by portfolio manager Terry Smith. He has a phenomenal long-term performance track record (Fundsmith has returned approximately 113% over the last five years). Top holdings include Microsoft, Philip Morris, PayPal, Novo Nordisk and Facebook.
Interestingly, Terry Smith recently said he is “pretty relaxed” about the impact of the coronavirus on his portfolio. He modelled the performance of the portfolio during the Global Financial Crisis. And he believes that Fundsmith should fall less than the broader market then rebound more quickly in the event of a market crash. This leads me to believe that boosting my exposure here is a sensible move.
Lindsell Train Global Equity
Finally, I’ve also put some money into another favourite of mine, Lindsell Train Global Equity. This is run by portfolio manager Nick Train. Like Fundsmith, it is a global equity fund that has a focus on high-quality, robust companies. And it has an excellent long-term performance track record (five-year return of approximately 107%). Top holdings currently include the likes of Unilever, Heineken, Diageo, London Stock Exchange and Nintendo. Given its the track record, I believe investing a little more money into it now, while stocks are down, is a sound long-term move.
Of course, global stock markets could continue to fall further in the coming days and weeks. No one knows how long this volatility will last. For this reason, I’m drip-feeding money into my funds, bit-by-bit, in order to average out my entry points.
It’s official: global stock markets have been on a tear for more than a decade, making this the longest bull market in history.
But this seemingly unstoppable run of success poses an uncomfortable question for investors: when will the current bull market finally run out of steam?
Opinions are split about whether we’re about to see a pullback — or even a bear market — in 2020. But one thing is crystal clear: right now there’s plenty of uncertainty and bad news out there!
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Edward Sheldon owns shares in Hargreaves Lansdown, Unilever, Diageo, GlaxoSmithKline, Microsoft and Royal Dutch Shell, and has positions in Franklin UK Rising Dividends fund, Fundsmith Equity, and Lindsell Train Global Equity. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool UK owns shares of and has recommended Facebook, GlaxoSmithKline, Microsoft, PayPal Holdings, and Unilever. The Motley Fool UK has recommended Diageo, Hargreaves Lansdown, and RELX and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.