Got the right one: Funds for decades: These investment funds help with retirement provision | message
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by Christoph Platt, Euro am Sonntag
D.he anniversary did not attract much media attention: a few days ago Lotto celebrated its 65th birthday in Germany. The first joint drawing in western Germany took place on October 9, 1955. A good three months earlier, some federal states had founded the German Lotto block.
The event was not broadcast on TV. Instead, it took place in public in a Hamburg hotel. Even then the game formula 6 out of 49, which is still known today, was valid. Lucky fairies on October 9 were two orphan girls. The organizers decided to do this because the original, the Italian Lotto di Genova, traditionally orphaned children drew the numbers. The first digit they got was 13 of all things. A murmur is said to have gone through the hall at the time.
It was not until ten years later, on September 4, 1965, that the drawing was broadcast on television for the first time. It was an integral part of German TV history until 2013, and since then you can only watch it on the Internet.
Nevertheless, several million German citizens participate regularly and hope to hit the jackpot. But whether or not you will win the lottery is a matter of luck. It’s different with investments. Those who invest consistently and have some perseverance will be rewarded – the more the longer they stay with them.
People who make provisions for old age have a particularly long time to invest. A range of 30 years and more is the rule and not the special case. A considerable amount of money can accumulate in this period, mainly because income can be invested again and again and the compound interest effect becomes noticeable. This works particularly well with accumulating funds that do not make distributions.
€ uro am Sonntag is taking the lottery anniversary as an opportunity to present a very special selection of funds. The editors have selected six out of 49 funds that are well suited for old-age provision. As with the lottery: Any number can bring a profit. For this reason, only an exclusive group was approved in order to determine the recommended funds.
Only portfolios with a fund rating of 1 entered the “lottery wheel”. The in-house rating of the Finanz Verlag considers a period of four years and takes the return and volatility of a fund into account. The best rating is given to products that have a risk-return profile that is well above average compared to their direct competition.
In order to take account of the long-term concept, which is important for old-age provision, the selection has been restricted to Grade 1 funds that have been on the market for at least 20 years. Around 80 portfolios remained. From these, the 49 portfolios with the best 20-year performance were determined.
Around two thirds of these are equity funds. The excess weight is not surprising, because these often achieve the highest return over long periods of time. Investors should take advantage of the strengths and, when saving for decades, focus on this asset class. Nonetheless, assets should be well diversified. Funds that buy fixed-income securities generally fluctuate less than equity funds and are therefore a useful addition. The editors have therefore selected four equity funds, a mixed fund and a bond fund from the 49 top funds.
In principle, the capital should not only be spread across different types of securities, but also across regions and industries. € uro am Sonntag takes this into account with its equity funds by presenting different portfolios for the regions of Europe, North America and Asia. A fourth product covers the topic of consumption worldwide.
For Europe as an investment region, the editorial team pulled Comgest Growth Europe Smaller Companies out of the lottery drum. The portfolio has more than quadrupled its value in the past 20 years, making it one of the most successful funds ever.
The product focuses on small caps and traditionally follows a quality growth approach, in which stocks of solid companies with clearly recognizable growth are acquired. The rule of thumb for portfolio managers is that profits should increase by 15 percent or more per annum at least over the next five years.
To get involved in the North American stock market, the editorial team recommends the Alger American Asset Growth – Evergreen for US stocks. Alger also focuses on growth values, and has done so for more than 55 years.
For the portfolio, the managers Patrick Kelly and Ankur Crawford select blue chips from the US leading index S & P 500, which show dynamic growth. This can be both younger companies, whose business is expanding rapidly, as well as established ones, which are given fresh impetus through new management, restructuring or product innovations. Typically 75 to 100 stocks get into the portfolio.
Look to the east
A long-term portfolio not only includes stocks from developed markets, but also from emerging countries. Investors can meet this with a portfolio for stocks from Asia excluding Japan.
The Fidelity Asia Focus Fund is convincing in both the long and medium term. Slightly more than half of its assets are invested in China and Hong Kong, with stocks from South Korea, India and Taiwan also being significant. The fund offers a good opportunity to benefit from Asia as a dynamically growing continent without all of the stocks in the portfolio necessarily coming from emerging markets. Corporations with a strong market position are acquired as well as stocks whose valuation on the stock exchange does not reflect the potential of the business.
The 49 top portfolios also include some themed funds. One of them catches the eye in particular: Robeco Global Consumer Trends has been one of the most profitable funds for both over 20 and over ten years. Anyone who had joined in October 2000 would have more than quintupled their assets despite various market crises.
Fund managers Jack Neele and Richard Speetjens seek to identify long-term global growth trends from a consumer perspective. They are currently focusing on three developments: the digital consumer, who is adopting new technologies faster and faster, consumers in emerging countries, whose prosperity is increasing, and strong brands that consumers are orienting themselves towards.
The use of mixed funds is ideal for investors who do not only want to bet on stocks. A good choice is the UniKlassikMix, which was known for a long time under the name GenoAS: 1. It is one of the stock-heavy mixed portfolios: at least 30 percent must be in stocks from the Eurozone invested at least 22.5 percent in shares from outside. A minimum share of 22.5 percent also applies to fixed-income securities.
The high consistency of the portfolio is remarkable: in none of the past ten years has the fund underperformed compared to its direct competition – a masterpiece.
A pension fund should not be missing in the 6 out of 49 draw. The editors noticed in this section of the Candriam Bonds Euro Long Term. It has more than tripled its value in the past 20 years – exceptional for a fund that only buys bonds. The background to this, however, is the continuous decline in interest rates during this period, which has driven the long-term skiers preferred by the fund. Accordingly, interest rate hikes would be particularly painful for the portfolio – but fans of long-term interest-bearing securities have to live with this risk. This does not detract from the good performance of the fund management.
Small and medium-sized companies from all over Europe are in the portfolio of Comgest Growth Europe Smaller Companies. He currently holds 33 titles and is therefore extremely focused. The health sector is currently very important (35 percent), and many titles also come from the IT sector (20 percent). The top positions are the Danish hearing aid manufacturer GN Store Nord and the British retailer B & M European Value Retail.
At Alger, consistency is very important. The investment boutique has been pursuing its growth approach since 1964, and Patrick Kelly, manager of Alger American Asset Growth, has been on board for 21 years. A sometimes significant overweighting of the IT, cyclical consumption and communication services sectors compared to the S&P 500 gave the fund a tailwind. Amazon, Microsoft and Apple currently have the largest share in the portfolio.
Large cap companies from Asia with the exception of Japan can be found in the Fidelity Asia Focus Fund. Stocks from China and Hong Kong make up the lion’s share of the portfolio. Top positions are the online retailer Alibaba and the Internet company Tencent from China as well as the semiconductor manufacturer Taiwan Semiconductor. The sectors currently dominate are finance, information technology and cyclical consumption. The fund currently holds 58 shares, 60 to 80 are common.
Some theme funds have their time, but then they disappear again. It’s different with Robeco Global Consumer Trends. This is also due to the fact that he takes the topic of consumption broadly: strong brands play just as much a role as increasing digital consumption or the rise of consumers in emerging countries. The broad positioning is also noticeable in the portfolio: none of the 50 to 70 stocks particularly stand out.
The UniKlassikMix is one of Union Investment’s more aggressive mixed funds. Around 70 percent of its assets are invested in stocks, and almost 30 percent in bonds. Some of the stocks must come from the euro zone, some from outside. There are no regional restrictions on bonds, but they must be quoted in euros. The portfolio is very small. Even the top positions weigh less than two percent.
The Candriam Bonds Euro Long Term invests primarily in government and corporate bonds from reliable borrowers that are denominated in euros. High-yield paper or emerging market bonds can be added to a small extent. The focus is on long-term bonds that mature in six years at the earliest. The duration of the portfolio is around ten years. The strategy has boosted returns over the long term, but can be problematic when interest rates hike.
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