How to double your money without the volatility
Mixed-asset portfolios dominate the list of funds that have returned more than 100 per cent to investors over 10 years while only taking on a small amount of risk.
There are 20 retail funds that have returned more than 100 per cent over the past decade while keeping annualised volatility to 10 per cent (rounded down) or lower, according to the latest
FE Trustnet research.
While past performance does not guarantee similar performance in the future, over the past 10 years markets have experienced periods of high growth and disastrous crashes, meaning that the portfolios and their managers have been tested in varied market conditions.
Unsurprisingly, funds with a large fixed interest component dominate the list, with 11 of them members of the Mixed Investment sectors.
Performance and annualised volatility of funds vs index over 10-yrs
Source: FE Analytics
Ten of the portfolios beat the FTSE All Share's total return, which measures returns gained by reinvesting dividends. However, the index has a 10-year annualised volatility of 18.35 per cent, substantially higher than any vehicle on the list.
Performance and annualised volatility of funds over 10-yrs
Source: FE Analytics
The fund with the highest returns was CF Ruffer European, which gained 291.8 per cent over the past decade despite the turbulence on the continent. It did so with one of the higher volatility scores on the list, however, of 9.54 per cent.
Performance of fund vs FTSE All Share over 10-yrs
Source: FE Analytics
Last month
FE Trustnet revealed that Ruffer European delivered the best risk-adjusted returns of any multi-asset fund over the past decade.
Ruffer has three funds on the list, the most of any fund house, with the other two being the CF Ruffer Total Return fund and CF Ruffer Equity & General.
In terms of volatility, Scottish Widows High Income Bond was the best performer, recording just 4.6 per cent, substantially lower than the second-lowest score of 5.65 per cent, achieved by Artemis High Income. Investec Monthly High Income was third, with a volatility of 6.03 per cent.
Newton Real Return is the only fund in the IMA Absolute Return sector with a 10-year history, and it appears on the list, albeit with the highest volatility of 10.13 per cent.
The fund has made the fifth-highest returns of those on the list however, gaining 162.67 per cent.
AWD Chase de Vere’s Patrick Connolly says the high number of mixed asset funds in the list underlined the importance of asset allocation to reducing volatility.
"Funds that can take big asset allocation bets including going into cash when the situation demands it have the flexibility to keep their volatility low," he explained.
"However, that depends on having a manager that can make the right calls at the right times."
Connolly expects riskier assets such as equities to start outperforming in the coming years, although exactly when and with what volatility is unpredictable.
There are a total of 437 funds out of the 2,201 available to retail investors that have made more than 100 per cent over the past decade, when no restriction is placed on their volatility.
"That is a massive difference [between 20 and 437] and it just shows that those that are willing to take on risk have the potential to outperform, even in turbulent times," he finished.