Ninety One Diversified Income Class I - Income (GBP)

The fund’s performed better than the IA Mixed Investment 0-35% sector average since Stopford took over in August 2012. The cautious investment approach and focus on income means we typically expect the fund to lose less value than peers when markets stumble, but not rise as much when markets rally.

We expect the income paid by this fund to remain relatively consistent and increase over time, but there are no guarantees.

The Ninety One Diversified Income fund aims to provide an income with potential for capital growth, while limiting the ups and downs to less than half of the UK stock market.

The fund mainly invests in bonds from around the world, but also invests in some shares too. It mostly invests in developed markets.

The managers have a cautious mindset, meaning their focus is on capital preservation rather than trying to provide lots of growth. Their view is that they want to win by not losing. This means that if the fund doesn’t fall as much during the bad times, it doesn’t have to go up as much when markets perform strongly.

The universe of potential investments for this fund is large and includes emerging markets shares, emerging market bonds, high yield bonds and derivatives. All of these types of investment add risk. Please note that the fund takes its charges from capital which can increase the yield, but reduces the potential for capital growth.

The fund mainly invests in bonds, but also invests in shares and investment trusts. It’s part of the IA Mixed Investment 0-35% sector, which means the amount invested in shares can’t go above 35%.

Ninety One’s investment approach is underpinned by its three ‘Compelling Forces’ which the managers believe drive asset returns over time. These are: Valuation – is the investment cheap? Fundamentals – do the facts underlying the investment support its case? Market price behaviour – are investors buying it, or likely to start?

This framework is applied consistently across all asset classes with each investment scored across these three metrics. The aim is to only invest in things that score well on all three metrics.

At the same time, the managers place all investments into one of three buckets of Growth, Defensive and Uncorrelated. This helps them think about overall positioning for the fund. It also helps them make sure that the fund isn’t taking too much risk.

The growth bucket is likely to do best during periods of stock market and economic growth. It’s made up of the riskier investments in the fund, such as shares, high yield bonds and emerging market bonds. All of these parts of the fund add risk.

The defensive bucket is likely to do best when stock markets wobble and economies are struggling. It’s mainly made up of investments in government bonds and high quality corporate bonds.

The uncorrelated bucket is usually the smallest bucket in the fund and is made up of investments that are expected to have more consistent returns over time, such as infrastructure.

The managers adjust the amount invested in each bucket depending on their view of the world. When they’re more positive about economic growth, they’re likely to increase their investments in the growth bucket. The opposite is true when they’re more concerned about markets and the economy.

The fund may invest more than 35% in securities issued or guaranteed by a permitted sovereign entity as defined in the fund’s Prospectus.