Ninety One Diversified Income fund added to the Wealth Shortlist

Ninety One Diversified Income was added to the Wealth Shortlist of funds chosen by our analysts for their long-term performance potential on 10 September 2024.

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%. The fund aims to provide an income with potential for capital growth, while limiting the ups and downs to less than half of those of the UK stock market. Most of the fund’s returns are expected to come from the income paid by the fund.

The fund is managed by John Stopford and Jason Borbora-Sheen. Stopford is Head of Multi-Asset Income at Ninety One and has over 30 years’ industry experience, having joined Guiness Flight in 1993. He has focused on bond investing over his career and has had a number of different roles over the years. He began managing this fund in August 2012.

Borbora-Sheen is a portfolio manager at Ninety One and has 13 years industry experience, having started his career at BlackRock in 2011. He joined Ninety One in 2015 and became Co-Manager on this fund in February 2019. Historically his focus has been more on shares however he works with Stopford on all investments in the fund.

Rather than think about their investments in terms of bonds and shares, they consider all investments in terms of three buckets: growth, defensive and uncorrelated. This helps the managers to consider how much risk they are taking in the fund.

The growth bucket is made up of the riskier investments in the fund, such as shares, high yield bonds and emerging market bonds. The defensive bucket is 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 underlying 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.

Over the long term we expect the majority of returns to come from the income provided. The fund is likely to lag strongly rising markets, in particular stock markets. But it’s also likely to provide some shelter during market falls and shocks.

We consider this fund to be a step up in risk from cash, with potential for losses, but with the aim of limiting losses compared with other funds and providing a consistent income over time.

We think the fund could provide diversification to an investment portfolio focused on growth or be a useful addition to a portfolio focused on providing an income.

We like the cautious nature of the approach and the focus on investing for income. The fund’s exposure to bonds naturally fits with these characteristics. The inclusion of shares helps to diversify where some of the income comes from and has the potential to reduce the fund’s sensitivity to interest rate changes. Our conviction in the fund today is based on Stopford’s vast experience in bond investing and his continued involvement in running the fund. That said, we view Borbora-Sheen in high regard and note he has been working on the fund since 2015. His continued involvement in running the fund will help to reduce the key person risk associated with Stopford over time.

We've also published a full fund update to go alongside this notification.

Read full fund update

Past performance is not a guide to the future. Source: Lipper IM to 31/08/2024.

More on Ninety One Diversified Income, including charges

Ninety One Diversified Income Key Investor Information