Three funds for your ISA

With the excitement about US tech stocks fading, investors may be looking at corners of the market that have long been ignored.

Although predicting the future is a futile exercise, being diversified and prepared for all outcomes is not.

Within the Wealth Club portfolios, we seek to back a broad range of experts with a distinctive investment philosophy, investing in a specific part of the market.

Isaac Stell, Wealth Club Portfolios Investment Manager shares three funds that offer investors a potential starting point when looking to diversify their exposures across regions and asset classes.

Lightman European: Founded in 2019 by industry veteran Rob Burnett, Lightman is a specialist European fund manager focused on a single deep value strategy. The Lightman European fund looks for businesses that have been through challenging periods but where the light at the end of the tunnel is in sight and earnings growth is returning. Lightman focuses on those investment characteristics that have historically led to the most consistent returns over the longest timeframes, namely lowly valued companies with strong balance sheets and high free cashflows. The Fund has returned 76.2% in the 5 years to end of February 2025, comfortably outpacing the 61.5% for the MSCI Europe ex UK index. With European equities looking cheap compared to US peers and signs that investors are pulling capital back out of the US and looking at Europe, Lightman’s European fund could well benefit and continue its strong run of performance.
Dodge & Cox US Stock Fund: With a rich heritage tracing back almost 100 years, Dodge & Cox is one of the largest independently owned investment firms in the world. Born out of the chaotic investment world of the 1920’s, the founders of Dodge & Cox believed clients deserved a firm that was built to withstand economic turbulence, rooted in a deep belief in the power of fundamental research. Their value focused investment philosophy is applied consistently and without compromise across their small suite of funds to this day. The investment process means the fund’s holdings have valuations below market averages, and tend to have relatively little invested in highly valued technology companies. Technology accounts for around 33% of the S&P 500, but just 7% of the Dodge & Cox US Stock Fund. With the shine seemingly coming off tech stocks, it may be a good time to diversify into the more overlooked parts of the US market. The Dodge & Cox US Stock fund could be a great starting point.
TwentyFour Monument: Away from stocks and shares, higher interest rates mean opportunities abound in fixed income markets. Despite a shaky 2022, investors are now being paid to hold fixed income after over a decade of diminishing yields. With the negative correlation between equity and bonds having now seemingly re-set, an allocation to bonds may seem prudent in economically and geo-politically uncertain times. When looking for fund managers, we always seek those that are experts within their chosen field. TwentyFour Asset Management specialize in a relatively niche area of fixed income known as Asset Backed Securities (ABS). ABS tends to offer higher yields then Government or Corporate bonds, whilst also demonstrating lower volatility thanks to their lower interest rate risk. The Monument fund, launched in 2009, is a £1.9bn fund offering exposure to a broad range of Asset Backed Securities from residential mortgage backed securities to auto-loans and credit cards. Yielding over 6% and with around 70% in AAA and AA securities, the fund offers potentially attractive returns from a less traditional area of the fixed income market while helping to dampen volatility in an investor’s portfolio.”