The likes of Jupiter Merlin Income and Jupiter Merlin Balanced not only lead their respective sectors on a cumulative basis over the long-term, but have also been among the most consistent, the latter achieving outperformance versus its IMA Mixed Investment 20%-60% Shares sector in each of the last 13 calendar years.
There is, however, a very able rival to the Jupiter Merlin franchise. While paltry in terms of size, the range of Henderson Cirilium funds has been more than a match for its higher-profile rival in recent years.
Manager Paul Craig (pictured) runs five portfolios, with different asset class-splits. The Henderson Cirilium Conservative fund is the lowest risk of the five, sitting in the IMA Mixed Investment 0%-35% Shares sector with the Jupiter Merlin Conservative Portfolio. Henderson Cirilium Strategic Income and Balanced sit in IMA Mixed Investment 20%-60% Shares sector, providing direct competition to Jupiter Merlin Income, while Moderate takes its place in the IMA Mixed Investment 40%-85% Shares sector. The highest risk of the five is Henderson Cirilium Dynamic. It has around three-quarters of its assets in equities, although it does have the flexibility to hold more in bonds and cash if it sees fit.
There is no global offering from the range to compete with the Jupiter Merlin Worldwide Portfolio.
Again, like Jupiter Merlin, the Cirilium funds invest in other collective portfolios to achieve their goals, but unlike their rivals they have significant exposure to closed-ended funds – or investment trusts. They do sometimes hold direct equities and bonds, with a couple in the range currently holding Berkshire Hathaway, for example. However, for all intents and purposes they are funds of funds.
The five Cirilium funds have combined assets under management (AUM) of just over £1bn – a fifth of the size of the Jupiter Merlin Income portfolio, which is £4.8bn in its own right. However, when it comes to performance, the Cirilium funds are on top.
According to FE data, when looking at three and five years, the Cirilium funds have outperformed their comparable Jupiter Merlin rivals on every occasion. None were launched prior to 2008, and so have yet to achieve a 10-year track record.
Take the Moderate fund, for example: it has returned 68.65 per cent over five years, putting it more than 20 percentage points ahead of Jupiter Merlin Balanced.
With returns of 69.39 per cent over the same period, Henderson Cirilium Dynamic is around 17 percentage points ahead of the Jupiter Merlin Growth Portfolio.
Performance of funds and sectors
| Name | 1yr returns (%) |
3yr returns (%) | 5yr returns (%) |
|---|---|---|---|
| Henderson - Cirilium Moderate | 19.77 | 28.9 | 68.65 |
| Jupiter - Merlin Balanced | 13.55 | 24.58 | 46.24 |
| IMA Mixed Investment 40%-85% Shrs | 14.25 | 24.98 | 36.17 |
| Henderson - Cirilium Dynamic |
22.95 | 32.08 | 69.39 |
| Jupiter - Merlin Growth Portfolio | 15.85 | 27.45 | 52.52 |
| IMA Flexible Investment |
14.49 | 24.37 | 33.36 |
| Henderson - Cirilium Balanced | 15.89 | 25.45 | 51.77 |
| Henderson - Cirilium Strategic Income | 14.12 | 27.98 | N/A |
| Jupiter - Merlin Income | 9.11 | 21.75 | 47.25 |
| IMA Mixed Investment 20%-60% Shrs | 8.87 | 18.14 | 28.04 |
Source: FE Analytics
As well as beating the Jupiter Merlin funds consistently, all of the Cirilium funds are top-quartile performers in their sector over every relevant time period. The Conservative fund only has a one-year track record, having been launched in March last year, but has had a good start.
They score well from a volatility point of view as well, with most proving slightly less volatile than their Jupiter rivals.
The Henderson Cirilium Balanced fund has a lower annualised volatility than Jupiter Merlin Income over both three and five years, for example. It also has a lower max drawdown over the period, and unsurprisingly comes out on top on a risk-adjusted return basis, which is measured by Sharpe ratio.
Performance of funds and sector over 5yrs
Source: FE Analytics
In spite of the Jupiter Merlin range's popularity, one point of controversy has been the funds’ charging structure. Their ongoing charges range between 2 and 2.58 per cent, making them expensive even for funds of funds.
Anyone interested in the Cirilium range will be happy to hear that all of its funds are cheaper. None charge more than 2 per cent, and the cheapest – Henderson Cirilium Conservative – has an OCF of 1.84 per cent. Craig’s high exposure to investment trusts, which tend to be cheaper than their open-ended rivals – has undoubtedly helped to drive these costs down.
Tim Cockerill, investment director at Rowan Dartington, thinks the range is an interesting option for investors, though he does not use the funds himself. He sees the range as a genuine multi-asset offering, given that manager Craig invests in a huge number of products including hedge funds, private equity, infrastructure, property, fixed interest and equities.
He says they are likely to be of particular interest to investors who like investment trusts.
"Craig’s background was at Exeter Investment Group, which specialises in investment trusts, so it’s no surprise to see a lot of them in the portfolios," he explained.
"You’ve got a really interesting mix of assets in there – very eclectic and diversified – which a lot of investors want. You’ve got things like the Raven Russia IT in there, which invests in warehouses in and around Moscow, which is obviously very niche."
Cockerill is impressed by the funds’ performance, but points out that they have all benefited from closing investment trust discounts in recent years, which will not necessarily happen again in the future.
"One of the big advantages of being in trusts in the last few years has been narrowing discounts – a lot have had really big moves, including a lot of the ones Craig holds such as the Pantheon private equity trust, which has seen its discount come in from 37 per cent to 18 per cent."
"The types of moves you’ve seen in private equity, for example, should really be seen as a one-off. Can you expect those moves to happen again? I would have to say no."
There are also passive versions of these Cirilium portfolios, although they were only launched this year and do not have a track record to speak of. Naturally they are much cheaper than the actively managed funds, but the multi-asset team that runs them can only add value by making asset allocation calls.
