Safe havens - be choosy
There are no perpetual safe havens. If in doubt...
• Recall queuing Northern Rock savers in 2007; a close scrape. Or Icelandic banks.
• How about Equitable? The choice of the establishment as well as many ordinary folk.
Today’s safe haven can be tomorrow’s trap. But yesterday’s dog might also be todays safe haven!
For example, many corporate bond funds fell 20%+ in 2008/9.
Yet, since 2009 we have highlighted the neat mix of both capital preservation and income from
the better investment grade corporate bond funds
- Henderson Sterling Bond, M&G Corporate Bond, and Fidelity Moneybuilder Income. These continue to enjoy “safe haven” status,
Property funds fell 30- 40% from 2007.
Property - safe haven?
Arguably, over the last year there were no steadier performers than some property funds - boring, predictable, profitable.
See the graph below comparing the Henderson Property vs UK stock market over the last year.
The Absolute Return sector sounds as if it should be full of “safe havens”. But there is not a guarantee that the value can’t go down.
Some funds in the sector are certainly worthy of your attention e.g. Insight Absolute Insight (though flat in 2011), and Standard Life Global Absolute Return Strategies (+2.1% in 2011).
In addition we like the Kames UK Equity Absolute Return (+3.8%) fund. It has illustrated an ability to make money even when the UK stock market was falling. This is important.
Newton Real Return (-0.35%) is a very long established Absolute Return fund. It tends to have a long term bias to global equities, but makes big switches to cash and bonds in times of stress. At the moment it has 30% in cash.
In conclusion, there are some excellent “safe havens” available - funds which look to limit falls in capital value, while also providing some income or potential for capital growth.