Our adviser panel's fund picks for 2012 had an average performance of 2.38 per cent for the year to 3 December 2012. While they trumped last year's picks (which made an overall loss), the funds still slumped well beneath the FTSE 100 and FTSE All-Share annual performances of 7.92 per cent and 9.75 per cent respectively.
The defensive picks returned an average of 7.5 per cent while the aggressive managed to lose an average of 2.8 per cent from their start value, although remember most of these picks are 'buy and hold' funds and need longer than a year to show their true colours. But will their picks for 2013 fare any better?
Defensive picks
| Fund | Picked by | 2012 performance (%)* |
| Standard Life GARS fund | Darius McDermott | 6 |
| CF Lindsell Train UK Equity | Steve Laird | 20.8 |
| Troy Trojan fund | Ben Yearsley | 3.7 |
| Ruffer Total Return | Mike Horseman | -0.39 |
Agressive picks
| Fund | Picked by | 2012 performance (%)* |
| JPMorgan Natural Resources | Darius McDermott | -14.76 |
| First State Global Emerging Markets Leaders | Steve Laird | 14.9 |
| Jupiter Japan Income | Ben Yearsley | -1.84 |
| GLG Core Alpha | Mike Horseman | -9.35 |
Source: Morningstar as at 3 December 2012
Darius McDermott, managing director of Chelsea Financial Services
Defensive:
■ 2012 pick: Standard Life Global Absolute Return Strategies (ISIN: GB00B28S0093)
■ 2013 pick: Newton Real Return (ISIN: GB0006780323)
"This is a diversified multi-asset fund with an absolute return mentality and, unlike some funds in the absolute return sector, it has lived up to its name. It has an experienced manager with a good long-term track record.
"I'm worried about bonds at the moment, particularly gilts and quality corporate bonds, so I think this fund is a good alternative for cautious investors who don't necessarily want to venture up the risk scale in fixed income. It also has a reasonable yield of just under 3 per cent.
"This fund is suitable for cautious investors or those looking for a good core for their portfolio."
Aggressive:
■ 2012 pick: JPMorgan Natural Resources (ISIN: GB0031835118)
■ 2013 pick: Aberdeen Emerging Markets (ISIN: GB0033228197)
"Aberdeen has a huge and experienced team in this asset class, which is necessary with the amount of money it runs but also what makes it so successful. This fund is quite simply the best in its field and consistently outperforms both its peers and the market.
"Emerging markets are cheap at the moment so it's a good time to buy for a long-term holding. I don't think China is doing as badly as everyone thinks and while GDP is not correlated to market returns, decent level positive growth can't hurt!
"This fund is for higher-risk investors."
Ben Yearsley, head of investment research at Charles Stanley
Defensive:
■ 2012 Pick: Troy Trojan Fund (ISIN: GB0034243732)
■ 2013 Pick: Artemis Strategic Assets (ISIN: GB00B3VDDQ59)
"This isn't a traditional defensive suggestion but the main aims of this fund are to thump the FTSE and beat cash. So, despite more volatility than you would expect from a defensive fund, there are good reasons to hold it.
"It is effectively a multi-asset fund with equities, fixed interest, commodities, currency plays and shorting all featuring. William Littlewood, its fund manager, is well known to investors from his extremely successful time managing the Jupiter income fund in the 1990s. This is one of my personal biggest holdings and it could form the core of a portfolio.
"The multi-asset approach helps to lower volatility and, even though the bond position has detracted from performance, investors should be happy with the overall return."
Aggressive:
■ 2012 Pick: Jupiter Japan Income (ISIN: GB00B0HZTZ55)
■ 2013 Pick: Jupiter Japan Income (ISIN: GB00B0HZTZ55)
"For the third year I am sticking with the same aggressive fund choice, even though it hasn't worked in the previous two. Let me explain my choice. The market is aggressive but the management style of the fund is not.
"Abe has been re-elected as prime minister, and his primary target is to deliver 2 per cent plus inflation. This will probably involve massively cranking up the printing presses, which will be bad news for bonds and the yen, but should benefit Japanese equities.
"The Japanese market remains one of the cheapest developed markets on many different metrics. Both my defensive and aggressive fund choices for 2013 are linked to the same scenario - higher Japanese inflation."
Mike Horseman, managing director at Cockburn Lucas
Defensive:
■ 2012 Pick: Ruffer Total Return (ISIN: GB00B80L7V87)
■ 2013 Pick: Ruffer Total Return (ISIN: GB00B80L7V87)
"This was not a vintage year for the fund, but it's hardly corked, either, with at least a positive return - albeit way below its peers inside the IMA sector. The Ruffer fund will continue to offer upside as the equity portion is well positioned and did rather well; this also combined with moves to reduce dollar exposure and the short-term disruption to pricing on the long-term book of index linkers regarding linking to RPI or CPI will also provide for some uplift.
"You should also look at the consistency of Ruffer as a house over a very long period and the defensive nature of the fund and its convictions. If you believe we are headed for an inflationary outcome down the road, this is the fund for you."
Aggressive:
■ 2012 Pick: GLG Core Alpha (ISIN: IE00B665M716)
■ 2013 Pick: Sarisan AgriSar (ISIN: GB00B3QL6L00)
"This is a global agriculture and food fund with an investment process and thematic approach that allows it to spread itself along the total food chain, from field to fork. Its manager has a deep understanding of the issues in this thematic play and is well respected by his peers, which is a real confidence boost.
"The macroeconomic outlook also points to this fund being a good choice as there are currently 7bn mouths to feed and this number is growing exponentially. The fund hasn't done much different recently but it constantly looks for associated companies to invest in across the globe. What kind of investors should buy it?
"All investors who believe we will face an ever growing population and want some equity risk should invest."
Steve Laird, senior partner at Carrington Wealth Management
Defensive:
■ 2012 pick: CF Lindsell Train UK Equity Fund (ISIN: GB00B18B9V52)
■ 2013 pick: CF Lindsell Train UK Equity Fund (ISIN: GB00B18B9V52)
"I'm sticking with Nick Train and the CF Lindsell Train UK Equity Fund, which I tipped last year. In the first 11 months of 2012, the fund returned 21.3 per cent and outperformed the FTSE All-Share by 10 per cent and its peer group by 5 per cent, continuing the recent trend. We agree with the manager's reluctance to invest in other collectives, unquoted shares, warrants and derivatives and we also share his view that counterparty risk, in the current economic climate, is best avoided."
"This is also a great value fund - the total expense ratio is under 1 per cent - proof that quality active fund managers can be found at a low cost. It's suitable for most investors and has an income option for those looking to supplement pensions in retirement."
NB: The minimum investment for this fund when bought directly is £500,000, but you also can buy it via platforms where the minimum investment is £500.
Aggressive:
■ 2012 Pick First State Global Emerging Markets Leaders
■ 2013 Pick Aberdeen Asia Pacific
"This year I've chosen an Asian fund because it's probably the only region in the world that isn't yet bankrupt - thanks to generally low levels of personal and government debt. I'm avoiding Japan as the only opportunity I can see there is if the yen depreciates sharply, which may well happen but as most of the investors I work with are investing in sterling, the overall effect on them will be mixed.
"A highly experienced fund manager is vital in this region and Hugh Young and his team have produced consistent results for many years, providing above-average returns for below-average risk - so some people might not regard it as aggressive."
