Fund in Focus: Investec Cautious Managed

Sheridan Admans, investment adviser at The Share Centre, explains how investors looking to profit from the investment potential of the stock market, but with reduced risk, could benefit from the Investec Cautious Managed fund.

"The unpredictability of the stock market can be unsettling for investors, but by holding a range of assets that rise and fall at different times, the overall effect can help to both reduce risk and smooth out the progress of your investment.

"Diversification is a vital part of investing and one the Investec Cautious Managed fund seeks to exploit. It aims to offer a combination of income and the potential for long-term capital growth by investing conservatively in a diversified portfolio of equities, bonds and other fixed interest securities.

"The fund is run by contrarian investor, Alastair Mundy. Mundy is not afraid to invest in companies that are not performing well at present. While the majority of investors seem to want everything in their portfolios to be going up at once, Mundy says that "if they are all going up together, then they can all go down together too."

"Wise words, as Mundy's affection for diversification appears to have served the Investec Cautious Managed fund well. It has consistently outperformed its ‘Cautious Managed' IMA sector over the last five years with an increase of 28.1% compared to just 17.8%. It has also been first quartile, on a cumulative basis, over the last 1st, 3rd and 5th year and more recently over the last 3 and 6 months.

"As the fund sits within the ‘Cautious Managed' IMA sector it is strongly governed as to how and where it can invest. No more than 60% can be invested in equities and a minimum of 30% must be invested in fixed interest. The fund is therefore suitable for investors looking for exposure to both equities and fixed interests securities, without the need to identify two or more separate funds."