The First Trust Vest U.S. Equity Buffer UCITS ETF – January will aim to match the price return of the S&P 500 up to a predetermined upside cap, while providing a 10% downside cushion through a built-in buffer mechanism.

The cap and buffer will be reset after a year in January 2026 to match market conditions. The ETF charges a 0.85% total expense ratio.

 PA Live: A World Of Higher Inflation 2025

Rupert Haddon, managing director at First Trust Global Portfolios, said: “FJAN represents the first ETF in our quarterly series of scheduled UCITS ETFs for our S&P 500 Target Outcome 10% buffer suite.

“In today’s volatile market environment, we believe FJAN offers a compelling solution for investors seeking exposure to leading S&P 500 companies while managing downside risk.”

The strategy will act as a complement to more traditional portfolios, and begins with near $100m. It will invest across the liquid multi-asset universe, taking long and short positions.

See also: BlackRock enters pact with Saba to ‘not seek to control or influence the board’

LOIM’s DOM Global Macro team is made up of five people and led by Valentin Petrescou and Didier Anthamatten. The team collectively transferred from Credit Suisse to LOIM, where they managed two multi-asset investment strategies.

Jean-Pascal Porcherot, co-head of LOIM, said: “At LOIM, we have deep partnerships with our clients and help them to precisely manage the risks and opportunities that arise across market cycles.

“With the launch of DOM Global Macro, clients benefit from the team’s extensive expertise managing multi-asset macro strategies that target absolute returns. The launch is an important milestone in strengthening LOIM’s alternatives business, as we expand our range of differentiated strategies that seek to create sustainable value for clients.”

PA Events: PA Live A World Of Higher Inflation 2025

Instead, the portfolios will operate on a combination of equity, cash and bond allocations. Particularly, this year will see a lift in non-GBP equities and an uptick in GBP cash & bonds.

Ryan Hughes (pictured), managing director at AJ Bell Investments, told Portfolio Adviser: “We’ve had a very good look at this alternatives space and the types of assets that we consider to be investable, and ultimately, we concluded they are not adding to the portfolios, and therefore they shouldn’t be there.

“We understand there are lots of people out there that use different flavours of alternatives, but we have a very particular approach to that has to be available actively and passively, which rules out a lot. The simple, transparent, low cost, that rules out a lot more. We’ve also seen a lot of this stuff go very wrong over the years. It’s great while it works, and then it doesn’t. (It’s) in your portfolio to provide you the protection when your equities aren’t doing so well, and the alternative should step in, but in reality, it just doesn’t work like that.”

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Where, then, will the team find their diversifiers in 2025? In this case, the simple answer is the right one to the AJ Bell team.

“It’s nice and straightforward. It’s cash. You can get a return of 5% today from money market funds and cash. Do you actually need to look to alternatives to provide that low risk, uncorrelated return when you have got a great standing start from a very low risk asset?” Hughes said.

“People generally have been reaching into the alternative space, either when there’s been very low returns on cash available, or when they got concerned about fixed interest. At the moment, only one of those is probably true, which is the risk around fixed interest and where we go from here with inflation. But if you’ve got a standing start of roughly 5% from your cash for a low risk investor, bag the easy money. Over the years, a lot of people try and over-complicate it. Sometimes the right answer is staring you in the face, and it’s the simplest one.”

In the last financial year, AJ Bell Investments grew by 45% to £6.8bn in assets under management, including £1.5bn in inflows. Its yearly strategic asset allocation begins by using a mean variance optimiser to create portfolios near the efficient frontier. The AJ Bell team then makes tactical adjustments to account for market context.

The MPS options include both active and passive versions, as well as a blended version. Notably, 2024 saw the active MPS outperform the passive version for the second year in a row.

“I’m not sitting here saying I’m beating the drum for active management,” Hughes said. “But I think what it is showing is that there is pockets of the market where active management can do well and that careful manager selection can be beneficial to that.”

US equities

AJ Bell Investments will up its allocation to US equities across all risk profiles, with the highest increase to its risk level three at 11%. In overall allocation, risk level one will have the smallest holding in US equities at 12%, with the highest at risk level four with 25%.

The decision is a reversal from 2024’s strategic asset allocation, where the team opted to take down the allocations to US equities. However, across the last year, the S&P 500 continued to climb over 26%.

As AJ Bell increases its allocation however, it proceeds with guardrails. It will introduce equal-weight products instead of simply market-cap products to protect against some of the concentration risks in the market.

James Flintoft, head of investment solutions, said: “We’re bringing in the equal weight to cushion that allocation, to make sure we’ve got the right time for diversification. The concentration is at a record high. Who knows how far it’s going to go? If you look at the top 20, that’s now 40% of the index, the top 10 is 37%, and the top three is over 20%.”

China allocation

Following the macroeconomic conditions of the past few years, the team also took a closer look at how China should play into its portfolio, not just in its allocation, but how it is viewed as an asset class.

Previously, China was placed within AJ Bell’s emerging markets and Asia Pacific ex-Japan categorisations. But in recent years, it has become clear to the team that the category is not necessarily reflective of where China sits. Instead, it has now been positioned as its own asset allocation.

While the move to separate China has been on the minds of the team for a while, it was not made possible until more recently as ETF products diversified. Now, the team feels there are enough individual China products, as well as emerging markets ex-Japan and ex-China products, to allow them to sit independently.

“This has been a really hot topic over the last couple of years that people want flexibility in their portfolios to dial up and down China exposure. We don’t have at this point a really specific view on China, but we’ve got the lever there should we need it. So we’ve put that as a standalone holding, whereas previously, if we wanted to do something very specific with China, it was very difficult to do,” Flintoft said.

Bonds

In the team’s 2024 allocation, the team found frustration in the performance of bonds, particularly when it came to the low risk end and the performance of US treasuries as markets went through a series of re-pricings on interest rates.

See also: ‘Strap in’: Trump returns to questions on tariffs and inflation

“That’s something that we can sit here today and say, ‘hands up, a year ago, we got that wrong’,” Hughes said.

“We thought that there would be more interest rate cuts than there have been, and I don’t think we’re alone in that position. We had lots of conversations with managers saying that they expected plenty of rate cuts, and they haven’t come through. That’s definitely been painful for us at the lower risk end.”

The surprisingly sticky inflation and higher interest rates have led AJ Bell to cut a significant amount of its exposure to non-GBP cash & bonds. The lowest level of risk now has an exposure of just 9% to the sector, with the highest risk having none.

Last year also presented surprises in the success of high yield, which AJ Bell had decreased its exposure to in 2024.

“We didn’t have enough high yield. We took high yield down a little bit last year and allocated that to investment grade. We were concerned about spread levels last year, because we thought they were pretty tight. They just got a whole lot tighter,” Hughes said.

Looking ahead

For 2025, the AJ Bell team predicts an average case one-year return of 5% for its lowest risk portfolio, and 7.5% for its highest risk portfolio. But the team emphasises that while it’s pleasant to have a high return, it is also important to deliver that return in the right way, and in a comfortable way for investors.

“We’ve all been on plenty of flights, and there are certain people that when the captain says fasten your seat belt signs, they absolutely panic. I’m one that grips the seat and the knuckles go white and I can’t stand any kind of turbulence. There are other people that are blissfully unaware and just sleep all the way through it,” Hughes said.

“That is exactly the same with markets. What we need to make sure is that those people that are in our lower risk funds, that want to grip the seat every time there’s a bit of market noise, they actually can be comfortable and still reach their destination. To the same point, we need to make sure that those people that are happy to sleep through all those lumps and bumps while the seat belt sign is on still reach the destination have the right kind of experience too.”

The iShares AI Innovation Active UCITS ETF is a relatively concentrated “best ideas” portfolio of 20-40 stocks, targeting exposure across the entire AI value chain.

It follows the same investment strategy as the BGF AI Innovation fund, which launched in December 2024. The strategy, which charges a 0.73% Total Expense Ratio, will be managed by Tony Kim and Reid Menge.

The firm has also announced the launch of the iShares World Equity Factor Rotation UCITS ETF. The strategy aims to outperform the broad global equity market by tactically allocating to “historically rewarded” factors.

See also: PA Live A World Of Higher Inflation 2025

The strategy will house between 150-250 holdings and charges a 0.30% TER. It is managed by Philip Hodges, PhD, BlackRock’s head of investments for factors and senior portfolio manager He Ren.

Jane Sloan, EMEA head of global product solutions at BlackRock, said: “With the addition of these funds, BlackRock is able to offer European investors active ETFs across both systematic and fundamental investment strategies.

“The launch of an active ETF as part of our existing AI suite provides clients the choice to tailor their exposure using the wrappers that work best for them.”

Managed by sustainable investing fund managers Fiona Manning and William Scholes (both pictured), the fund was launched in April 2023 with a dual objective to deliver capital appreciation as well as measurable positive environmental and societal outcomes. The team’s differentiated investment strategy and research process look to identify companies that are enabling positive change in emerging markets.

Commenting on the announcement, Manning said: “We are delighted to be coming into 2025 having achieved two key milestones for the fund – the publication of our first Sustainability Report since the fund’s launch and the planned adoption of the FCA’s Sustainability Impact label.

“The measurement of impact is complex and still evolving. We are committed to working with companies and data partners to drive forward the measurement and delivery of positive impact in emerging markets. We will always be transparent about the challenges we face and will work to improve investor understanding of dual outcome sustainable products such as ours.”

Co-fund manager Scholes added: “Fiona and I are dedicated to finding those companies that we believe can help address unmet needs, solve a problem or push forward a global technological frontier. Our aim is to deliver strong returns for investors without compromising on franchise quality and draw more capital into long term investment in countries where it will go furthest towards achieving the ambitions of the United Nations’ Sustainable Development Goals.”

This story originated on our sister title, PA Future

The ETF focuses on US large and mid-cap stocks, following the Morningstar US Dividend Enhanced Select Index-NR with 282 US securities. It charges investors 0.12%.

See also: ISS recommends Herald shareholders to vote against Saba proposals

The company now has a total of 26 index-tracked ETFs, with a global ETF platform encompassing $33bn assets under management.

Caroline Baron, head of ETF distribution for EMEA at Franklin Templeton, said: “As US equities are an important allocation for our clients, we are delighted to offer this differentiated US equity income solution, which provides both a tilted exposure towards dividend-paying stocks and a high US equity market participation.

“The ETF is particularly suited for investors looking to generate income and capitalise on the potential growth of US equities, which are known for offering lower yields, but higher capital appreciation compared to other developed markets.”

Dina Ting, head of global index portfolio management, and Lorenzo Crosato, ETF portfolio manager, will oversee the strategy.

“Enhanced yield can help investors weather potential volatility given uncertainties over major policy changes, such as tariffs and their impact on inflation and balance of trades,” Ting said.

“Our rules-based strategy, featuring a relatively low active risk compared to the broad market, can be an ideal core or satellite allocation for investors seeking diversified US market exposure.”

The strategy, which has a 0.55% total expense ratio, will list tomorrow (15 January) on the London Stock Exchange. It is also available to European investors on the Börse Xetra and Borsa Italiana.

Classified as an article 8 SFDR fund, it aims to offer investors access to commodities associated with energy transition themes such as electric vehicles, transmission, charging, energy storage, solar, wind and hydrogen production.

See also: SJP equity fund aligns with SDR Sustainability Focus label

The ETF will track the underlying WisdomTree Energy Transition Metals Commodity UCITS Index.

Through a partnership with data solutions firm Wood Mackenzie, the selection and weighting of the underlying metals will be based on a forward-looking rating system.

The metals are given an ‘intensity rating’, which combines the demand growth forecast for the metal over three years with a market balance rating that reflects whether the metal is under or over supplied. The portfolio then rebalances twice a year.

Nitesh Shah, head of commodities and macroeconomic research, Europe, at WisdomTree, said: “Metals will be crucial to advance the energy transition. Whether it is to power more electric vehicles or create solar panels, it’s hard to see a world where the development of energy transition technologies is not dependent on the supply of some key metals. However, the challenge is to ensure that the technologies needed to achieve the energy transition are produced at scale.

“The challenge for investors is to navigate through the dynamics of technology shifts, trade policies and sudden increases in metal supply. The expertise offered by our partnership with Wood Mackenzie and a methodology that incorporates both supply and demand drivers help the strategy remain highly adaptive to the evolving market.” 

The combined fund will manage over £330m assets and will be managed by Philip Wolstencroft (pictured).

Wolstencroft, who founded the ‘SmartGARP’ systematic investment process, has managed the fund since its launch in March 2001.

See also: IA: UK reinvests in November following two months of exits

The strategy is a top quartile performer in the IA Europe ex-UK sector over one, three and five years, according to FE Fundinfo data.

Wolstencroft said: “In our fund we own stocks with a historical yield of over 4%, and the growth rate in earnings and cashflows for these companies has been averaging about 7% per annum for the past decade.

“Given that the return from any asset is a function of its yield plus its growth rate, I’m positive on the outlook for the fund.”

The Aegon Sustainable Diversified Growth and Aegon Sustainable Equity funds intend to adopt the label from the end of March 2025 following shareholder notification.

Aegon also confirmed the Aegon Ethical Equity fund, Aegon Ethical Corporate Bond fund and Aegon Ethical Cautious Managed fund will not have UK sustainability investment labels, as they operate exclusionary screens and do not fit within the label categories defined by the FCA. However, they will be in the unlabelled with sustainable characteristics category, which will result in disclosures aligned with the labelled funds to ensure transparency.

Miranda Beacham (pictured), head of responsible investment at Aegon, said: “We are very pleased to see SDR is gathering momentum in providing greater clarity and confidence in the market for our clients and look forward to adopting the new labels for our funds.

“Our ethical franchise, remaining unlabelled with sustainability characteristics, will continue to be entirely unambiguous in its goals, an attractive proposition to some investors looking to align their values and views on responsible investing.

“Indeed, our Ethical Investor Survey – carried out every two years – ensures our funds stay aligned both to these goals, and also with societal changes.”

This story originated on our sister title, PA Future.

Since joining Liontrust in 2008, he has helped to develop the firm’s Economic Advantage team while co-managing its UK equity fund range.

“I feel tremendously proud and privileged to have had the opportunity to fulfil my potential working with the team at Liontrust and would like to thank all those both within the Liontrust family and without, past and present, who have contributed to this,” Fosh said.

“Having recently suffered from an unexpected and severe bout of illness, now seems the right time to step back and enjoy my return to health by devoting my time to my own family whose love and support sustained me during that difficult time.” 

Anthony Cross, head of the Liontrust Economic Advantage team, added: “It has been great to work and invest with Julian over the past 16 years.

“He has made a significant contribution to the success and growth of the Economic Advantage team over this period, delivering some strong returns for investors. We all wish Julian a very happy and deserved retirement.” 

See also: 30-year gilt yields hit 27-year high

Economic Advantage team takes over Liontrust Global Smaller Companies fund

Liontrust’s Economic Advantage team will take over the management of the firm’s £23m Global Smaller Companies fund on 14 January.

The team’s process has previously been used exclusively on UK equity products. The strategy will be managed by Alex Wedge and Bobby Powar.

As part of the shake up, Alex Game will replace Wedge as a named fund manager on the Liontrust UK Smaller Companies and UK Micro Cap funds.

Game joined Liontrust in May 2024 from Unicorn Asset Management, where he had worked for almost a decade.   

See also: Saba plans full cash exit option for Herald

The Ninety One Sustainable Equity and RGI European funds had their ratings suspended this month while Invesco Bond Income Plus Limited, the Royal London UK Government Bond fund and the Evenlode Global Equity fund were awarded A ratings. The CCLA Better World Global Equity fund was also recognised with a positive prospect rating.

Ninety One’s rating was suspended following a proposition to merge the fund into its Global Sustainable Equity fund. Results of the proposition will be announced on 16 January.

See also: Calastone: Equity funds pull in record £27.2bn inflow in 2024

“If successful, investors will receive new units in the Ninety One Global Sustainable Equity fund on 28 February. Dealing in the UK Sustainable Equity fund will be suspended from 12 noon on 27 February until 9am on 3 March when investors will have received their new units,” Square Mile stated.

“The Square Mile analysts believe there to be a high chance that the merger will be approved and have therefore taken the decision to suspend the Square Mile rating pending the outcome of the vote. Should the merger gain approval, the fund will be removed from the Academy of Funds.”

The RGI European fund was suspended following the announcement that its fund manager James Sym would be departing the firm. Sym has been a partner at the company since 2020 and head of equities since 2022.

See also: ARC: Inflation leaves private portfolios 12% below 2021 levels

“Although he is departing River Global, he will continue to manage the RGI European fund on a sub advisory basis. Therefore, the fund’s investment process and approach are expected to remain the same. The Square Mile analysts aim to meet with Mr. Sym when he is at his new group and will make a decision on the fund’s rating thereafter,” Square Mile stated.

While the Aegon Ethical Cautious Managed fund was under review by the Square Mile team, it retained its Responsible A Rating as Euan McNeil exited the firm. However, the fund will continue to be managed by Audrey Ryan, who has been a co-manager since January 2024, and Iain Buckle, who previously ran the fund with McNeil before Ryan, will rejoin the fund.

If the votes were to go through, the board of the Opportunities trust said there could be a change in the current windup policy, which would remove the option for a full cash exit.

The board today announced a scheme that under the current conditions, would either allow investors to transition their investment to the open-ended Janus Henderson UK Equity Income & Growth Fund or receive the entitlement in cash.

See also: Baillie Gifford: ‘We are appalled by Saba’s actions and conduct’

In Saba’s letter to shareholders on 18 December, it said if the new board members were put in place, they would asses “all go-forward options available to the trusts”, including liquidity events that would offer shareholders “to receive substantial liquidity near NAV”.

Wendy Colquhoun, chairman of Henderson Opportunities trust, said: “Saba is attempting to take control of the Company with no assurances as to what will happen to shareholders’ investments. Saba wants to remove a strong and highly qualified independent Board that acts in the interests of all shareholders and replace it with its own non-independent board that may put Saba’s interests first.

“The Board’s message to shareholders is clear: please exercise your vote and don’t let Saba take unnecessary risks with your money.”

The European Smaller companies trust said that if the board was overtaken by Saba, its plans “indicate that they will not continue to invest in the European small cap sector”. In the past five years, the trust has had a share price total return of 73.6%, compared to a sector average 37.8%.

James Williams, chair of The European Smaller Companies trust, said: “Saba is attempting to take control of your Company by removing a highly qualified, independent board that acts in all shareholders’ interests. It’s clear that Saba’s motives are self-serving. It would like to install directors who would not be independent of the Company’s largest shareholder and has indicated that it may appoint itself as investment manager.

“This could endanger shareholder protections, radically alter the Company’s investment risk profile and deny investors the opportunity to benefit from the proven European small cap investment strategy.

“The Board is therefore recommending that shareholders vote against all resolutions proposed. Saba is counting on a high proportion of shareholders not voting. Investor participation is key and will determine the Company’s future.”

Saba launched a campaign in December to replace the boards of seven investment trusts, claiming that they “have not taken sufficient steps to resolve the trusts’ structural issues, depriving shareholders of superior returns”. It pointed to the narrowing of the trust’s discount since Saba’s building stake in the company. The trust currently trades on a 3.15% discount.

In response to the claims by Janus Henderson, Saba stated: “Over the last three years, Janus Henderson’s ESCT and HOT have both traded at a disappointing ~13.5% average discount to NAV. These respective double-digit discounts demonstrate that the trusts’ boards and portfolio managers have failed shareholders.

“During Chair Wendy Colquhoun’s tenure, HOT shareholders have suffered -40% cumulative underperformance. This disastrous track record is the result of poor investment decisions by the manager and negligent oversight by the board. Janus Henderson’s proposed reconstruction scheme for HOT is inferior to our nominees’ plan and their claim that Saba would seek higher fees at shareholders’ expense if selected as investment manager is made up. Do not be fooled – this scheme is simply a last-ditch attempt to protect the underperforming board, continue lining their own pockets with shareholder capital and distract from an indefensible track record.”