Nervous investors turned to flexible mixed-asset funds in May, the latest sales data from Cofunds shows.

Seven of the 10 most popular funds last month take a multi-asset approach to investing. Funds such as Cazenove Multi Manager Diversity, Jupiter Merlin Income and Premier Multi Asset Distribution are specifically designed as a one-stop shop to give investors diversified exposure to a variety of asset classes. 

Ten best-selling funds in May

Rank	Fund	Sector
1	M&G Optimal Income	Sterling Strategic Bond
2	Cazenove Multi Manager Diversity	Mixed Investment 20-60% Shares
3	Jupiter Merlin Income	Mixed Investment 20-60% Shares
4	Stan Life Inv GARS	Absolute Return
5	M&G Strategic Corporate Bond	Sterling Corporate Bond
6	HSBC Open Global Distribution	Mixed Investment 20-60% Shares
7	Newton Global Higher Income	Global Equity Income
8	M&G Global Dividend	Global
9	Invesco Perpetual Distribution	Mixed Investment 20-60% Shares
10	Premier Multi Asset Distribution	Mixed Investment 20-60% Shares

Source: Cofunds 

Half of the funds in the top-10 sit in IMA Mixed Investment 20-60% Shares sector. Data from FE Analytics shows that the average fund in the sector is up 1.56 per cent year-to-date and 22.72 per cent over three years. 

CF Ruffer Total Return has been the best performer in the sector over the last five years, with returns of 56.14 per cent. Jupiter Merlin Income has been one of the most consistent performers in the IMA universe, beating the sector average in each of the last 12 calendar years. 

Performance of funds vs sector over 5-yrs



Source: FE Analytics

"It is not surprising to see that Mixed Investment 20-60% Shares continued to reign in May as this popularity is broadly in line with the sector’s market share for 2012 overall," commented Michelle Woodburn, head of fund group relations at Cofunds. 

"Interestingly though, Global funds also attracted high levels of net sales last month, with Global Equity Income, Global and Global Emerging Markets accounting for 10 per cent, 7 per cent and 4 per cent of net sales respectively." 

Standard Life Inv Global Absolute Return Strategies was another popular choice among investors during May. The five crown-rated fund uses a wide investment remit to achieve its goal of providing investors with a positive return in all market conditions. The managers blend traditional bond and equity exposure with alternative investment strategies and derivatives. 

Our data shows that it has returned 34.81 per cent over the last three years and accrued more than £11bn in assets under management (AUM). 

AWD Chase de Vere’s Patrick Connolly believes that the sales figures reflect the sentiment that is dominating markets at the moment. 

"The number of multi-asset portfolios on the list says to me that the trend we have seen for a number of months now is still continuing," he said. 

"People are still very nervous about the markets and don’t want to take the risk of holding pure equity funds." 

"The advantage of multi-asset funds is that they allow you to diversify your risk to protect when times are hard but the downside is that you don’t fully take advantage of any rises in the market." 

The mixed-asset theme continues with IMA Strategic Bond, which was the second most popular sector during May. Richard Woolnough’s M&G Optimal Income fund remains the most popular choice overall among investors. 

The fund has experienced inflows of more than £1bn in the last few months, FE data shows. It has outstripped the competition with returns of 51.51 per cent over the last five years. The average Strategic Bond fund has returned 22.6 per cent. 

Performance of fund vs sector over 5-yrs

 

Source: FE Analytics

There are just a handful of pure equity funds on the list of top-20 best sellers from the fund supermarket. Investors are looking to diversify their exposure away from the UK with M&G Global Dividend, Newton Global Higher Income and First State Global Emerging Markets Leaders all popular choices.