Hargreaves Lansdown (HL) has added the Ninety One Diversified Income fund to its Wealth Shortlist, a list of funds that HL believes offer quality and value.

The multi-asset income fund is the second in HL’s Wealth Shortlist, with the firm stating it believed it would provide clients with a defensive income option that was a step up in risk from cash for those looking for capital preservation and total returns.

Managed by Ninety One head of multi-asset income, John Stopford, and portfolio manager, Jason Borbora-Sheen, the fund mainly invests in bonds, while also investing in shares and investment trusts.

It aims to provide an income with potential for capital growth, while limiting the ups and downs to less than half of the UK stock market.

Most of the fund’s returns are expected to come from the income paid by the fund.

“We think the fund could provide diversification to an investment portfolio focused on growth or be a useful addition to a portfolio focused on providing an income,” commented HL senior investment analyst, Hal Cook.

“We like the cautious nature of the approach and the focus on investing for income. The funds’ exposure to bonds naturally fits with these characteristics.

“The inclusion of shares helps to diversify where some of the income comes from and has the potential to reduce the funds’ sensitivity to interest rate changes.

“Our conviction in the fund today is based on Stopford’s vast experience in bond investing and his continued involvement in running the fund.

“That said, we view Borbora-Sheen in high regard and note he has been working on the fund since 2015. His continued involvement in running the fund will help to reduce the key person risk associated with Stopford over time.”

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