Returned almost 90% in five years
Darius McDermott
My core message to investors these past couple of years has been balance and diversification.
We live in a world where volatility is likely to be more prominent, particularly as US President Donald Trump keeps markets on their toes with his playbook of policy shock followed by relief.
A recent update I read described the juxtaposition in markets perfectly. Record-setting levels of risk asset investing, coupled with unprecedented safe-haven demand (just look at the gold price).
The fact rates are going up on long bonds would suggest the market is not convinced by the optimistic narrative. Those uncertainties might be largely due to concern over whether developed economy governments are able to balance their books.
“Today is a market for being very active. Being able to deliver on growth is going to be a lot more difficult than it was five years ago,” said Philip Matthews, manager of the IFSL Wise Multi-Asset Income fund.
“You need to be extremely active on your equity allocation to match this because dispersion in markets is huge at the moment. If you deviate from the index, there is a lot of value to be had in a number of sectors. Before you had to just move from the US to other markets to get diversification – now you have to delve deeper into sectors and market caps.”
Matthews is an experienced hand, having spent considerable time as a fund manager at both Jupiter and Schroders.
The Wise multi-asset fund has a value focus and invests across numerous assets, both directly and indirectly. The process is very bottom-up but with a macro overlay.
Proceed with caution
Despite optimism over dispersion in markets, Matthews’ portfolio leans towards caution. Around 40% is currently in fixed income and infrastructure and accounts for more than 50% of the total yield.
The fund has recently added to the Premier Miton Strategic Monthly Income Bond fund, which has a relatively short duration and low credit risk profile. This reflects Matthews’ concern over the uncertainty about what will happen to longer-dated government bond yields. It also holds the TwentyFour Strategic Income fund for similar purposes.
In the quest for balance, Matthews has combined that short duration focus with exposure to infrastructure, including renewables. Names like HICL Infrastructure sit in the core infrastructure bucket, with the likes of Renewables Infrastructure Group in the renewables segment.
“The aim really is to be as diversified as possible,” said Matthews.
“These infrastructure positions offer a more protected angle into long-duration assets. We model out our income as we are aware we have to grow it, while also being cognisant that some asset classes are over distributing their income at the moment. We have to be very selective as we do not want to saddle the portfolio with high-yielding things we cannot ever get out of.”
The yield on the fund is currently around 5% and Matthews believes there are more reasons to be positive from an income standpoint, pointing to a number of assets returning above the risk-free rate.
He said there remains a significant opportunity within the investment trust space, with strong exposure to property, infrastructure, healthcare, private equity and biotech via this route.
Property, in particular, has played a big role in the fund’s recent outperformance. Throughout 2025, property companies were trading on highly attractive implied yields and unusually wide discounts, which has been confirmed through bids in companies held in the portfolio.
Names like Urban Logistics, Care Reit and Empiric Student Property were recycled out of following gains amid bid activity.
“There is a lot of pressure on the property sector simply because there are too many companies. They need more scale and the costs are too high. Consolidation is logical and the same can be said within the renewables space. Having a portfolio that has wind, sun and battery exposure all rolled into one makes sense from a diversification perspective,” said the manager.
Taking advantage of opportunities
One of Matthews’ biggest fears has centred on the US. While the US has been expensive at a time when others have been cheap, the manager worried the former could not go into a sell-off without bringing other markets with it.
“Outperforming but still losing money is not much of a victory,” he said.
The weakening of the dollar and the rotation into other markets was a pleasant surprise to him at the start of the year. He said the opportunity in other markets is less pronounced now, but still prefers UK, European and emerging market equities.
But as a manager with a value focus, the game has changed, and he is finding numerous opportunities.
“We are in a very different world to 2019, where value was basically confined to banks, miners, oil and gas. It is everywhere now, for example in the likes of healthcare and pharma. There are significantly higher quality names that fall into that value sphere,” said Matthews.
He added it remains essential to keep picking up on opportunities in markets, even if they feel uncomfortable.
A good example was Liberation Day in April, when the increased volatility resulted in the fund adding to the Odyssean investment trust, a small-cap vehicle Matthews felt had exposure to companies with international revenues that would be relatively immune to uncertainties like the upcoming UK Budget.
We like the team’s straightforward process and focus on managers with a simple yet disciplined investment approach. This is an interesting alternative for those looking for an attractive income, while also offering the balance essential at this time.
A return of almost 90% in the past five years, according to FE Analytics, is not to be sniffed at either.
The above article was written by FundCalibre’s Darius McDermott, who is managing director at FundCalibre. Please see a link below to the article on Investment Weeks main site – which will ask you to sign in.
FundCalibre’s Darius McDermott: IFSL Wise Multi-Asset Income nails the balancing act