Standard Life Investments Global Absolute Return Strategies, Invesco Perpetual High Income and CF Woodford Equity Income are among the funds advisers have been focusing on the most over the volatile past three months, our data shows.
The third quarter of the year has proven to be a difficult on for markets, after volatility ramped-up significantly and global equity markets generally went from being in positive territory to sitting on losses.
FE Analytics shows that the FTSE All Share fell 6.57 per cent over the three-month period but emerging markets suffered the most with a 15.42 per cent drop being seen in the MSCI Emerging Markets index. The S&P 500 has held up relatively well after losing just 3.38 per cent.
Price performance of indices over 2015
Source: FE Analytics
Against this backdrop, investors were noticeably more cautious. Standard Life Investments Global Absolute Return Strategies, or ‘GARS’, was the most researched fund by the financial advisers, wealth managers and discretionary fund managers that use FE Analytics.
Another contributing factor, of course, is that GARS is the largest fund in the Investment Association universe with assets of £26.2bn in the unit trust alone and as such will have many eyes on it, especially during times of market stress.
The fund did fall 2 per cent over the third quarter, better than the return of the FTSE All Share but lagging government bonds – the Barclays Sterling Gilts index was up 3.31 per cent over the three months. It must be kept in mind that this is a short time frame to assess a fund with a rolling three-year target and a strong long-term track record.
GARS was much more heavily researched in July and August, with interest tailing off in September as markets started to show early signs of calming down from the events of a rather bleak August and its ‘Black Monday’ sell-off.
Our data also shows that the fund was most often compared with Invesco Perpetual Global Targeted Returns, which is headed by three former Standard Life Investments managers that were instrumental in the success of GARS.
Newton Real Return, Insight Absolute Insight and Henderson UK Absolute Return were other funds researched alongside the Standard Life behemoth. All four of the ‘other’ absolute return funds feature in the 100 most research funds on FE Analytics last quarter.
IA UK Equity Income funds also proved to be closely watched during the three months with 10 funds appearing in the 100 most researched list. This reflects the continued popularity of the sector among private and professional investors.
Mark Barnett’s Invesco Perpetual High Income fund sits in second place on the list, while Neil Woodford’s CF Woodford Equity Income is in fourth place. Both FE Alpha Managers’ funds significantly outperformed their average peer and the FTSE All Share over the three months, reflecting their quality defensive investment styles.
Performance of funds vs sector and index over Q3
Source: FE Analytics
(The return of the FTSE All Share is different in the above graph as we’ve used total return here rather than the index’s headline performance used previously.)
As can see, Woodford’s fund posted a positive return during the quarter – making it just one of four funds from the 84-strong IA UK Equity Income to do so. The others to end the quarter ahead were CF Miton UK Multi Cap Income (4.27 per cent), MFM Slater Income (4.03 per cent) and Unicorn UK Income (0.01 per cent).
With all the attention on Asian equities over the quarter, the larger IA Asia Pacific ex Japan members were also closely researched. First State Asia Pacific Leaders, headed by FE Alpha Managers Angus Tulloch and David Gait, sits in third place overall while the team-managed Newton Asian Income is in sixth.
Not one member of the sector was able to make money over the quarter but these two funds, which are both known for their conservative approach to the asset classes and an ability to protect investors’ capital, held up well. First State Asia Pacific Leaders is ranked fourth out of 93 while Newton Asian Income is in seventh place.
Performance of funds vs sector and index over Q3
Source: FE Analytics
Furthermore, advisers commonly researched the funds alongside each other but products such as Schroder Asian Income, Fidelity South East Asia and Aberdeen Asia Pacific Equity were frequently compared with them.
Some 13 of the 100 most researched funds were in the Investment Association’s bond sectors, with the largest of them all – FE Alpha Manager Richard Woolnough’s M&G Optimal Income – leading the pack and sitting in fifth place.
With assets of £19bn, the fund has proven to be a popular choice with investors but has been hit by net outflows in recent months; its size at the start of 2015 was around the £24.5bn mark.
Over the past three months, the fund has fallen 1.46 per cent putting in the third quartile of the IA Sterling Strategic Bond sector, where the average fund has lost 0.97 per cent. M&G Optimal Income is in the peer group’s top quartile over five years, but has slipped into the third over three years and the bottom over one.
The fund was most often compared with Jupiter Strategic Bond and Invesco Perpetual Monthly Income Plus, which are both outperforming it over one, three and five years. However, during the tough third quarter the M&G fund did perform better than Invesco’s offering.
