The rise of multi-asset solutions over recent years highlights the trend for advisers and clients to outsource their investment decisions to "one-stop shops". Although this can be a more expensive route, our data shows there are a number of funds in this category with ongoing charges figures (OCFs) of less than 1 per cent.
With this in mind, we now turn to the cheaper options in the four mixed investment sectors and the global sector – for anyone who wants to avoid regional or single-country funds – that have delivered strong performance in recent years.
IMA Flexible Investment
Christopher Metcalfe’s £1.4bn Newton Managed fund has a four FE Crown rating, coupled with low ongoing charges of 0.79 per cent.
It has outperformed the average IMA Flexible Investment fund over one and three years. It is up 34.49 per cent over the longer period, compared with the sector’s 23.43 per cent.
Metcalfe, who also runs the Newton Real Return fund, recently told FE Trustnet that investors should prepare themselves for years of lower returns, given the marked rise in valuations and the lack of earnings growth coming through so far.
FE Analytics data shows Newton Managed’s risk-adjusted returns have been better than the sector average over the past three years.
It has a Sharpe ratio of 0.64, compared with its peer group’s 0.46, and a Sortino ratio of 0.64, against the sector’s 0.43.
Performance of fund vs sector over 7yrs
Source: FE Analytics
IMA Mixed Investment 0%-35% Shares
The IMA Mixed Investment 0%-35% Shares sector can be a tricky hunting ground for highly regarded managers, being the IMA’s smallest mixed investment sector with assets of only £5.3bn and just 45 funds.
Furthermore, none of the sector’s members appear on the FE Research Select 100 list of recommended funds or Square Mile’s Academy of Funds.
However, Chris Evans’ £64.4m FP Matterley Regular High Income fund has ongoing charges of just 0.86 per cent and holds an FE Crown Fund Rating of five. The fund sits in the first quartile of its sector over one, three and five years.
Since launch in March 2006, it has returned 46.91 per cent against the peer group average of 27.28 per cent.
While its volatility is slightly higher than the average fund in the sector, its risk-adjusted returns are strong, with a three-year Sharpe ratio of 0.97 and a Sortino ratio of 0.87.
Source: FE Analytics
IMA Mixed Investment 20%-60% Shares
Audrey Ryan and Iain Buckle’s £209.2m Kames Ethical Cautious Managed fund appears on Square Mile’s Academy of Funds, which recognises that its strict ethical policy has not stopped the management team from achieving both long-term growth and income.
Square Mile said: “We have a high regard for these experienced managers, who are supported by Kames' well-resourced equity and fixed income team. Kames operates a strong team-based approach to research and investment management.”
“[Kames'] global policy strategy group and the investment teams have shown an ability to successfully assess the macroeconomic environment and have proven themselves adept at navigating the fund through changing market conditions.”
Kames Ethical Cautious Managed has an OCF of 0.82 per cent and is first quartile in the IMA Mixed Investment 20%-60% Shares sector over one, three and five years. Since launch in March 2007, it has posted a 48.6 per cent return
Source: FE Analytics
Robin Hepworth’s £247.1m Ecclesiastical Higher Income fund is another portfolio that has delivered first-quartile numbers over one, three and five years. It has ongoing charges of 0.84 per cent.
The fund is found on the FE Research Select 100 list, thanks to Hepworth’s cautious approach which has allowed the fund to outperform its peers in both rising and falling markets, with less risk.
Ecclesiastical Higher Income has returned 462.04 per cent since launch in November 1994
FE Analytics shows Hepworth has outperformed his peer group composite in 57.14 per cent of rising markets and 66.67 per cent of falling ones.
The FE Research team said: “Hepworth is a long-term investor with a cautious approach, which means he may miss out on some short-term opportunities. However, the market tends to reward this type of strategy as the manager is not prone to over-reacting to immediate news.”
Ecclesiastical Higher Income has a maximum drawdown of 9.71 per cent over five years
Source: FE Analytics
IMA Global
There are 261 funds in the IMA Global sector and it is an area popular with investors looking for a one-stop fund to broaden their exposure beyond UK equities. With total assets of £71.4bn, it is the second largest sector in the IMA universe.
FE Analytics flags up
The fund is first quartile over one, three and five years, and first or second quartile in seven of the past 10 calendar years.
Investec Global Free Enterprise is more volatile than the sector over five years, with a score of 16.74 versus 13.15 for its peers. During this time, however, it has seen annualised returns of 13.38 per cent, compared with the sector’s 10.18 per cent.
Performance of fund vs sector over 7yrs
Source: FE Analytics
