Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

The Fidelity Select 50 Balanced Fund boasts a pretty unique selling point. As a fund of funds centred around the Select 50, it gives investors access to a cherrypicked list of our experts’ favourite investments.

Prior to its launch in 2016, we conducted extensive customer research which indicated there was considerable interest among investors in a single vehicle which would grant easy exposure to ‘best buy’ lists. In particular, demand was driven by engaged investors who ‘enjoy looking after their investments and spend time ensuring they get it right’, but who don’t want to do it all alone.

The result was the Select 50 Balanced Fund, a medium-risk portfolio investing predominantly in Select 50 assets and aiming to produce long-term capital growth for investors.

However, the fund does not simply mirror the performance of Select 50 funds. Since launch, its portfolio has been actively managed by Ayesha Akbar, who picks and chooses holdings she feels are best suited to working together to achieve its aims. To give her the full flexibility to do that, she can hold up to 20% of assets outside the Select 50.

Earlier this month, Tom Stevenson caught up with Akbar to discuss her investment approach, especially in light of the COVID-19 pandemic. Now that markets are beginning to stabilise, Akbar explains how we “are starting to see the value of active managers”, as those who backed the right businesses start to reap the rewards.

A cautious approach

Akbar says she is sceptical over a developing mismatch between economic realities and remarkable upturns in share prices. In her eyes “markets probably have got a little bit ahead of themselves and that warrants a little bit of caution at this time.”

As such, she is currently neutral on equities - traditionally a riskier share class than bonds or cash - as we still try to piece together what sort of economic environment will last over the long term.

Fixed limits on the fund allow 30-70% of holdings to be allocated to equites, and 20-60% to bonds (as well as 0-20% in cash). Currently that weighting stands at a more cautious end, with 42.3%, 31.5% and 12.7% allocations respectively.

That leaves a fair weighting of the portfolio invested in other asset classes, such as property and commodities. Akbar is not afraid to make use of these alternative investments. As she explains, “What we are trying to do is find managers or asset classes that give us a little bit of differentiated performance from equities and bonds. This year has been a really good example of why you’d want alternative asset classes in your portfolio.”

She points to the fund’s position in the Assenagon Alpha Volatility fund, which is designed to perform well amid high volatility. For similar reasons, she appreciates her exposure to gold, which serves as a hedge against uncertainty.

Balance amid uncertainty

Knowing exactly what markets are going to do next is impossible, whether you’re in the middle of a global pandemic or not. When trying to navigate your way through them, then, balance is key. It’s the practice that reflects the theory of caution. With value and growth assets represented, as well as a wide asset mix and broad diversification, Akbar isn’t trying to call the future - she is setting the fund up for whatever comes next.

More on the Fidelity Select 50 Balanced Fund

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. There is a risk that the issuers of bonds may not be able to repay the money they have borrowed or make interest payments. When interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall. Select 50 is not a personal recommendation to buy or sell a fund. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

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