It won’t have escaped investors that 2015 has been very different from the bull market years of 2012 and 2013 or the relatively flat 2014.
The strength of the US economy cushioned various potential headwinds across the globe, with many indices finishing last year having made a positive return, even though they were rather lacklustre when it came to the UK.
The Shanghai Composite index ended on a particularly high note, having produced a total return of 58.45 per cent over the year after the launch of the Shanghai-Hong Kong Stock Connect programme and an influx of domestic retail investors.
Performance of indices in 2014
Source: FE Analytics
As proof that all good things must come to an end, however, the mass sell-off in Chinese stocks from June this year has rattled markets around the world, with the FTSE 100 losing £74bn and the Dow Jones shedding 588 points in one day on ‘Black Monday’ last week.
With bond yields still at historic lows and with an interest rate rise from the Federal Reserve and the Bank of England potentially around the corner, people are more confused than ever about how to protect their money while making a profit.
In these conditions some will turn their attention to multi-asset funds and FE Trustnet has looked across the mixed investment sectors to find the funds that have provided investors with the smoothest, and highest, returns so far this year.
IA Mixed Investment 0%-35% Shares
Out of 51 funds in the lower risk multi-asset sector within the Investment Association universe, JPM Cautious Managed has provided the highest return year-to-date, having outperformed its peer average by 3.2 percentage points to provide a return of 2.77 per cent.
Performance of fund vs sector and benchmark in 2015
Source: FE Analytics
It has also posted a top-decile maximum drawdown, which measures the most money an investor would have lost if they bought and sold at the worst possible times, since the start of the year.
However, the £174.5m fund, managed by Talib Sheikh, Gareth Witcomb and James Elliot, has only achieved a third-quintile annualised volatility, maximum loss and maximum gain over the same time period.
In close second place for performance is the four FE Crown-rated Jupiter Distribution fund, which is managed by Rhys Petheram and FE Alpha Manager Alastair Gunn, and has returned 2.02 per cent so far this year.
While the fund hasn’t won any top prizes for volatility this year, having found itself in 17th place in the sector, it has the second-lowest maximum drawdown out of its peers.
Both JPM Cautious Managed and Jupiter Distribution have FE Risk Scores of less than 30, which means the funds are deemed to be less than one-third as risky as the FTSE 100 index by FE’s metrics.
The funds that have come up trumps for the lowest annualised volatility this year, however, are Barclays Wealth Global Markets 1, which is just £4m in size, and Thesis Optima Income, which is managed by Roberta Gamba and has a risk score of just 21.
While the former has underperformed its average peer three times over in 2015, the latter has managed to outperform its peer group composite to provide a positive return of 0.78 per cent, which is an outperformance of 1.21 percentage points. Thesis Optimal Income also yields 3.72 per cent.
IA Mixed Investment 20%-60% Shares
In the next multi-asset sector, both SF Cautious and Standard Life Investments Dynamic Distribution have provided the highest gains out of 141 funds, outperforming their peer average by 4.4 percentage points with total returns of 4.19 per cent.
Performance of funds vs sector in 2015
Source: FE Analytics
Both funds, which are £15.3m and £315m in size respectively, have also been awarded a five FE Crown rating and have FE Risk Scores of under 45, which means they are expected to carry less than half the risk of the FTSE 100.
The similarities don’t stop there, as the funds are also in the top decile for their maximum drawdown, maximum loss and Sharpe ratio, which measures risk-adjusted returns, so far this year.
However, neither funds is in the top decile for their annualised volatility in 2015 – Premier Multi-Asset Conservative Growth has the lowest in the sector, as well as the lowest maximum drawdown.
Managed by David Hambidge, Ian Rees, David Thornton and Simon Evan-Cook, the £95.4m fund has a risk score of just 14 but has underperformed its peer group composite more than six times over, having suffered a particularly lacklustre performance last month.
IA Mixed Investment 40%-85% Shares
The four FE Crown-rated fund that has achieved the top performance in this sector this year is CF Ruffer European, which has returned 6.38 per cent and outperformed its peer average by 6.6 percentage points.
Performance of fund vs sector and benchmark in 2015
Source: FE Analytics
Co-managed by Timothy Youngman and Guy Thornewill, the £279m fund has achieved a top-decile maximum drawdown and top-quartile annualised volatility, not to mention that it has the highest Sharpe ratio in the whole sector by more than double.
With a second-quintile Sharpe ratio, PFS Hawksmoor Distribution has the lowest volatility out of the 136 funds in the sector.
The five FE Crown-rated fund, which is £49m in size and has a risk score of 43, has outperformed its peer average and benchmark by 0.97 and 1.49 percentage points respectively this year, as well as offering a yield of 3.94 per cent.
A fund that deserves a mention for both its high return and its smooth ride this year is SF Positive, which comes in second place for its annualised volatility.
Not only has the £20.4m fund achieved a top-decile maximum drawdown and Sharpe ratio, it has also outperformed its peer average by 4.73 percentage points, providing a return of 4.51 per cent.
SF Positive, which is managed by Andy Parsons and Sheridan Admans, consists of 21 underlying funds and holds three FE Crowns.
IA Flexible Investment
Out of 140 funds in the IA Flexible Investment sector, SF Metropolis Value has delivered the highest return this year of 6.83 per cent, outperforming its sector average by 7.73 per cent.
The £34m fund consists entirely of US, UK and European equities, with the exception of an 11.7 per cent cash weighting.
Despite this sizeable holding in the money market, as well as boasting a top-quartile Sharpe ratio, it is only in the third quartile for its annualised volatility.
In second place for its performance this year is Sand Aire Generation, a four FE Crown-rated fund that has the same risk score as SF Metropolis Value of 65 and has returned 5.27 per cent year-to-date.
Also consisting of only equities with exception of a cash weighting, which is currently at 10.9 per cent, it is perhaps no surprise that the fund has also achieved a third-quartile annualised volatility, despite its top-quartile Sharpe ratio.
The fund with the lowest volatility so far this year is CF Ruffer Equity & General, which has been managed by FE Alpha Manager Grispos since 2007 and holds a 36 per cent cash weighting. The other two largest weightings in the £217m fund are in North American equities at 29 per cent and UK equities at 22 per cent.
CF Ruffer Equity & General, which has a clean OCF of 1.26, has also outperformed its average peer and benchmark by 2.57 and 4.5 percentage points respectively this year, achieving a return of 1.67 per cent.
Performance of fund vs sector and benchmark in 2015
Source: FE Analytics
