Earlier this year, FE Alpha Manager David Coombs, who runs the Rathbone Multi-Asset Portfolios, told FE Trustnet that some funds can experience their best returns in the early days and waiting for that three-year milestone can cause an investor to miss out on big gains.
With this in mind, we have scoured the three AFI lists to find funds that were launched after 1 November 2011 and have already been noticed by our panel of leading advisers.
We’ve also made sure the funds are tipped for investors of different risk profiles, as all five have places in the AFI Aggressive, Balanced and Cautious portfolios.
Majedie UK Income
The fund launched in December 2011 under the leadership of FE Alpha Manager Chris Reid and Yuri Khodjamirian.
It resides in the IMA UK Equity Income sector and has the aim of maintaining an attractive yield while outperforming its FTSE All Share benchmark over the long term.
Since launch, Majedie UK Income has comfortably outperformed with a total return of 77.79 per cent against the index’s 41.02 per cent rise and the peer group’s 47.59 per cent average gain.
FE Analytics shows it is the fifth best fund in the sector when it comes to alpha generation over its history.
Performance of fund vs sector and index since launch
Source: FE Analytics
The FTSE 350-focused portfolio has proven slightly more volatile than the All Share and the sector over this time but the fund also has lower maximum drawdown – which shows how much an investor would have lost if they bought at the peak and sold during the trough – than both.
Last month, F&C’s Gary Potter told FE Trustnet that the fund is one of the future champions of the UK equity income space, as he likes the managers’ preference for out-of-favour stocks and firms that are committed to paying dividends.
Majedie UK Income has a clean ongoing charges figure (OCF) of 0.78 per cent and yields 3.62 per cent.
Fidelity Global Dividend
Within the IMA Global Equity Income sector, the young portfolio that advisers tip for all risk profiles is Daniel Roberts’s £100m Fidelity Global Dividend fund.
Since launch in January 2012 it’s gained 47.10 per cent and outperformed both its MSCI AC World benchmark and its average peer, as the graph below shows.
Performance of fund vs sector and index since launch
Source: FE Analytics
The fund’s largest geographical weighting is to Europe ex UK at 36.40 per cent, followed by North America at 35.60 per and the UK at 10.80 per cent.
Its biggest individual holdings are Reed Elsevier, Johnson & Johnson and Wolters Kluwer, a Dutch information services and publishing company.
Fidelity Global Dividend has clean ongoing charges of 0.95 per cent and yields 2.83 per cent.
GLG Strategic Bond
Managed by Jon Mawby and Andy Li, this fund launched almost three years ago to the day and has already attracted asset of £925.8m.
Since launch, it has outpaced the average fund in the IMA Sterling Strategic Bond sector by returning 33.54 per cent.
Performance of fund vs sector since launch
Source: FE Analytics
It’s a best ideas bond fund that invests globally and currently has its largest exposure in the BBB-rated part of the bond market, followed by the A and BB-rated areas, according to its latest factsheet.
The managers said: “The overall structure of the fund continues to be run with the profile of a low duration credit fund. This is in line with our constructive view on global default rates in the light of financial repression by central banks globally.”
“On a geographical and sector basis, the main movement in the portfolio from an asset allocation perspective is our rotation away from the US high yield sector and into the European financial sector over the course of 2014.”
GLG Strategic Bond has a clean OCF of 0.81 per cent and yields 4.21 per cent.
Invesco Perpetual Balanced Risk 8
This £225.1m fund was launched in February 2012 as one of three risk-rated multi-asset funds managed by its Atlanta-based global asset allocation team, headed by chief investment officer Scott Wolle.
It targets long-term capital growth through different economic environments by investing in derivatives and other instruments offering exposure to equities, fixed income and commodities.
It aims for 8 per cent average volatility over a full market cycle. Since launch, it has returned 8.76 per cent.
It has no benchmark and comparisons between IMA Specialist members are not very useful. Its volatility since inception is 5.96 per cent, although is far less than the full market cycle it aims to perform over.
Performance of fund since launch
Source: FE Analytics
The portfolio is diversified, with its largest exposures being to metals and petroleum, followed by UK bonds.
It aims to invest in assets that have uncorrelated returns to create a smoother performance profile.
Invesco Perpetual Balanced Risk 8 has clean ongoing charges of 0.73 per cent.
Kames Property Income
This is the youngest fund on the list, having only launched in March this year.
It is managed by Alex Walker and David Wise. Over the fund’s short history it has underperformed its IMA Property peers by returning 2.10 per cent.
However, it is important to remember these are very early days and, as the graph below shows, it has been less volatile than its peers.
Performance of fund vs sector since launch
Source: FE Analytics
It can hold up to 80 per cent of its portfolio in bricks and mortar property with the balance being invested in property shares, real estate investment trusts, specialist property funds and cash. Given its recent launch, the managers are still investing the portfolio.
In September, they bought five new buildings, three of which are let to Mecca Bingo and two rented to Town and Country Inns, exchanged contracts on two more and put offers on three properties.
Kames Property Income has a clean OCF of 0.96 per cent and yields 4.21 per cent. Its track history is too short to calculate yield.
