Investors in the IMA’s mixed asset sectors have been punished for taking on extra risk over the last five years, according to the latest FE Trustnet research.

Data from FE Analytics shows that the Flexible Investment sector – in which managers are free to hold up to 100 per cent in equities – has returned less, at a higher level of risk, than any of the IMA’s four multi-asset sectors.

In a reversal of what investors might have expected, the Mixed Investment 0-35% Shares sector has been the best performer, with an average return of 9.74 per cent, ahead of Mixed Investment 20-60% Shares, which returned 6.34 per cent.

The higher risk Mixed Investment 40-85% Shares sector has returned 5.57 per cent over the last five years while the average Flexible Investment fund, with an annualised volatility score of 14.72 per cent, has returned just 3.21 per cent.

Moreover, low-risk funds with an emphasis on capital appreciation have been among the best performing in each of the four sectors over the period.

Within the Flexible Investment sector, the top-performing vehicle is the Trojan fund. Headed up by FE Alpha Manager Sebastian Lyon, the portfolio has returned 43.64 per cent over five years. It also tops the sector over one, three and 10 years. The fund had just 31 per cent of its assets invested in equities as of 30 April 2012.

FE Alpha Manager Martin Gray’s CF Miton Special Situations and CF Miton Strategic Portfolios are two of the leading lights in the Mixed Investment 40-85% Shares sector.

Gray’s track record over the long-term speaks for itself; he has returned 97.95 per cent over the last 10 years – more than double that achieved by his peer group.

He is famed for being one of the best-performing managers during the 2008 financial crisis, returning 5.89 per cent during the calendar year.

Performance of manager vs peer group over 10-yrs



Source: FE Analytics

CF Ruffer Total Return is the standout performer in IMA Mixed Investment 20-60% Shares over five years. FE Alpha Managers David Ballance and Steve Russell have an outstanding record in both rising and falling markets and have consistently added more Alpha than any other manager in the sector.

At the other end of the risk spectrum, MFM CFS Balanced Opportunities has taken on an annualised volatility of 21.63 per cent over the last five years – the third highest across all four sectors – but has lost 33.15 per cent over the period, again more than any other mixed asset investment.

Over the last three years, while markets have generally risen, albeit with high levels of volatility, the more traditional risk/reward pattern emerges. Mixed asset funds with a higher proportion of their funds in equities have performed better.

The £36m Investec Managed Growth fund in the Flexible Investment sector is one of the top-performers over the last three years, with returns of 40.72 per cent. The fund had 94.9 per cent of its assets invested in equities as at 30 April 2012.

The leading low-risk funds have still managed to keep up with rising markets. The Trojan fund returned 44.88 per cent over three years, but has just 20 per cent invested in the equity market.