How to beat the market while still playing it safe: The top ‘boring’ investment funds that will pay off in our turbulent times

When the going gets tough, the tough can rest assured that the most boring funds in their investment portfolio will protect them from the worst of it.

Racy, high-growth funds that back exciting tech stocks often get a lot of attention, but it is crucial not to forget the importance of including some Steady Eddies in your portfolio too.

Cautious funds may not shoot the lights out when the stock market is soaring, but can protect you during turmoil.

Darius McDermott, managing director at FundCalibre, says: ‘Excitement has its place when you’re investing, but in a world of geopolitical chaos, supply chain disruptions and AI upheaval, investors’ appetite for boring, predictable funds that can weather the storm is growing.’

A boring fund is one designed to be cautious and protect your investment, as well as deliver growth.

By holding a mix of shares, bonds and other assets, these funds won’t be the top performers when stock markets are surging but should shelter you when they take a tumble.

Managers give such funds different labels and operate them in a variety of ways, but the common thread is an aim to reduce volatility.

So-called Volatility Managed funds were the fourth most popular fund category in April, according to the latest figures from industry body the Investment Association, as investors looked for ways to manage their risk levels.

Some £555 million was poured into these funds, which aim to limit the impact of market fluctuations and provide a smooth ride.

That’s hardly surprising after Donald Trump’s ‘Liberation Day’ tariffs announcement sent stock markets tumbling, only for his partial reversal with a 90-day pause to send them back up again.

But if you are thinking longer term and want a stable part of your portfolio that you can rely on through thick and thin, what should you look for?

How to choose a boring fund

Choosing a boring fund is just like selecting any other investment: see how it has fared against other similar funds over time; check its investment objectives and how it fits in with your other holdings; and look into the portfolio to see where it puts its money.

Consistency is key. You want a fund that can deliver slow and steady returns year in, year out – be wary of those that have one stellar year and struggle the next.

Laith Khalaf, head of investment analysis at AJ Bell, says: ‘Over the long run, a full-blown equity approach can be expected to deliver higher returns, but in times of turmoil more boring funds come into their own.’

Number-crunching by AJ Bell looked at the performance of the boring funds that have been available to investors since the onset of the Covid pandemic at least. It defined ‘boring’ as predominantly those that appear in one of three cautious fund categories according to the Investment Association.

These are Targeted Absolute Return, which are funds designed to deliver growth in all market conditions; Volatility Managed – funds designed to have limited volatility; and Mixed Investment 20-60 per cent Shares – which are funds that have a relatively small proportion of their portfolio in shares as these tend to be volatile.

The top performers during pandemic panic

As the Covid pandemic took hold in 2020, global stock markets plunged. Between February 4 and the start of the UK lockdown on March 23, the average investment fund lost 21 per cent. The worst performer was down 56.8 per cent.

But 156 funds delivered a positive return during this first bout of Covid volatility.

Short-term government bonds and short-term money market funds did well as people looked for a safe haven.

Some ten cautious funds generated a positive return.

Trium ESG Emissions Improvers fund proved to be the top cautious performer, up 17.5 per cent during the period.

Some of the broader-focused cautious funds that performed best include those in the Mixed Investment 20-60 per cent Shares sector. These have a greater focus on assets such as gold, bonds and property, which may hold up better when markets are down.

Among these, Mr McDermott likes Orbis Global Cautious fund, which ‘has delivered positive returns every year for the past five and brings genuine diversification’. It invests in stocks such as Siemens Energy and Kinder Morgan. It has returned 27.3 per cent over three years. He adds: ‘They may not be flashy, but multi-asset funds offer valuable flexibility, helping them adapt to rapidly changing markets. Their goal is to deliver consistent, incremental returns.’

Strategies that held up as Ukraine war began

The outbreak of war between Russia and Ukraine in February 2022 sparked global turmoil.

Prices of Ukraine’s main exports, including wheat and sunflower oil, soared, prompting dozens of providers to collapse.

Between February 4 and June 17 2022, the average investment fund was down 8.5 per cent and the worst lost 47.5 per cent.

Across all funds, 226 managed a positive return, many of which focused on commodities, which were well placed to capitalise on the soaring price of energy.

The Vontobel Commodity fund, for example, was up 30 per cent.

Some 31 Targeted Absolute Return funds had positive returns. These aim to deliver a positive return regardless of market conditions. But it is important to check each fund’s strategies, as some are riskier than you might expect.

Mr Khalaf says: ‘Usually Absolute Return funds work by combining stocks with other assets like bonds and gold, which act as ballast in falling markets.

‘Some use more sophisticated tools such as shorting, so investors need to take on board the additional complexity of such strategies.’

The Argonaut Absolute Return fund was a top performer during both this period and Covid and has returned 36.5 per cent over three years. A significant portion of its portfolio is held in ‘short’ positions, meaning it bets against certain stocks, which can be risky.

In this sector, Mr McDermott likes Premier Miton Tellworth UK Select. ‘It has delivered consistent performance with minimal drawdowns – exactly what you want from an absolute return fund, but hard to find,’ he says. The fund has returned 26.2 per cent over three years.

‘Liberation Day’ tariff survivors

This year Donald Trump brought about a short-lived stock market crash with his announcement of high tariffs on imported goods to America.

The decline started in anticipation of his so-called Liberation Day announcement on April 2 and continued until he revealed a 90-day pause on April 8.

From February 18 to April 8 2025, the average fund dropped 9.6 per cent and the worst performer lost 31.9 per cent.

The top performing fund overall was Ruffer Gold, up 7 per cent.

Across all funds, 217 delivered a positive return during this period – and 24 of them came from the cautious cohort.

BNY Mellon Absolute Return Bond, up 3.2 per cent over this time, was the seventh best performer. It focuses on fixed income, investing in debt issued by governments and companies.

The fund’s manager, Harvey Bradley, says: ‘The aim is to deliver a positive return in all market environments, even when inflation and rising rates hit bond markets hard. The key is to keep nimble, have a global mandate to maximise your number of potential opportunities and to actively exploit market volatility.’

Its largest holdings include bonds issued by the US, Japanese and New Zealand governments, as well as by large companies such as National Grid and the German bank KFW.

The fund is up 24.8 per cent over three years.

But if you DO hanker for a world of thrilling adventure… 

For investors who want something a bit more exciting, there is a world of choice among the thousands of funds and investment trusts on offer. City Editor Alex Brummer caught up with two fund managers who take an adventurous approach to find out what they do.

It’s tempting to think of fund managers as desk-bound boffins with masses of research and data at their fingertips trying to make index-beating decisions.

The managers of the buccaneering BlackRock Frontiers Trust, Emily Fletcher and Sam Vecht, have a different approach.

Both are adventurers who tread where most sane City investors dare not go. The world is their oyster, and whether it is Syria, Tajikistan or Turkey, in the middle of a bombing of the parliament, they have travelled far and wide assessing investment opportunities.

Sometimes the adventures of a fund manager can be a bust.

Mr Vecht says: ‘Going to Syria turned out to be a waste of time because there was a revolution, the Arab Spring.’

Meeting them in a hospitality suite high up in BlackRock headquarters in the City of London, where breakfast is served by a uniformed waiter, it is hard to imagine them on the road.

But there is an informal competition between Ms Fletcher and Mr Vecht to visit and make a judgment about investment conditions in the greatest number of countries.

Mr Vecht has lost count of the nations he has visited but it is around 80; Ms Fletcher may be just ahead.

She says: ‘Our general rule is we will not invest in a country unless we’ve been there. Unless we have met management, typically five or six times, and we insist on meeting their customers.’

The pair are the eyes and ears on the developing world and emerging markets within the sprawling $11.5 trillion (£8.5 trillion) BlackRock asset management colossus. They have become the first port of call for the most powerful figure in global investment, Larry Fink, the group’s chairman and chief executive, when he heads off to exotic locations.

Fink himself, or someone in his office, will consult the Frontiers managers on political, economic and investment conditions in the country to be visited. And shareholders in the trust can tap into that knowledge too, for a 1.41 per cent ongoing charges annual fee.

Frontiers represents a high-risk investment strategy, operating across volatile political and economic landscapes. If you can stomach the risk, this can be rewarding. Since the fund was revamped in 2010, net asset value has climbed by 178.6 per cent.

This has considerably outperformed its current benchmark, MSCI Frontier Emerging Markets, by a cool 89.4 per cent.

Ms Fletcher says: ‘We now invest in anything that isn’t in the top seven emerging markets. We step outside that to explore markets we think are under-represented, under-talked-about, under-researched and super interesting.’

It means that China, Indian, Korea, Taiwan, South Africa and Mexico, which together represent 85 per cent of the global emerging markets index, are off the agenda.

Frontiers has investments in the most volatile parts of the world, such as the Kurdistan region of Iraq. And it first visited Kazakhstan in 2004 and 2005, but it wasn’t until 2018 that it felt comfortable about investing there.

Mr Vecht says: ‘It’s about putting in the shoe leather across a range of places. One must remember these are very challenged countries. When people are excited about them it’s probably a dangerous time because the risks are being priced. We’ve made money for clients, but we are buying a single stock, not a country.’

There is a tendency among many fund managers and investors to think of fast-growing India as the go-to place for future returns, but Frontiers has done well by investing in its neighbour, Pakistan.

Ms Fletcher says: ‘I did travel to Pakistan, seven months pregnant. It was wonderful. Going for a barbecue in the hills of Lahore. There is a jarring dissonance with what you might read in the Press.’