Your favourite multi-asset funds examined
FE Trustnet takes a closer look at three of the most popular funds on our site that reside in the IMA’s Mixed Investment sectors.
By Mark Smith, Reporter, FE Trustnet
Thursday July 12, 2012
Brian Dennehy, managing director of FundExpert, recently slammed multi-asset funds as a solution for “lazy” advisers
. However, they still remain among the most popular products on FE Trustnet
and provide a one-fund solution to many investors’ diversification needs.
Investec Cautious Managed
With top-quartile performance over three, five and 10 years, the £2.1bn Investec Cautious Managed portfolio is one of the most consistent funds in the Mixed Investment 20-60% Shares sector.
While the likes of CF Ruffer Total Return, Jupiter Merlin Income and Threadneedle Navigator Balanced Managed have a better track record over the last decade, it is the contrarian style of industry stalwart Alastair Mundy
, who heads up the fund, that has seen it gain a host of admirers.
Contrarian investing works on the principle of buying unloved assets and selling them again once they are back in demand, an area in which FE Alpha Manager Mundy excels.
In the last 12 months, Investec Cautious Managed has lost marginally more than its sector average. Part of this underperformance can be attributed to the manager’s negative view on pharmaceuticals, which, as a defensive favourite, have rallied strongly amid the stock market chaos.
However, Mundy told FE Trustnet in May
that investors were overlooking significant structural weaknesses in the sector and that he anticipates a decline.
The fund has a minimum investment of £1,000 and a total expense ratio (TER) of 1.61 per cent.
The Mixed Investment 40-85% Shares sector poses a problem for retail investors because the three most impressive funds – McInroy & Wood Balanced, Newton Global Balanced and McInroy & Wood Income – are aimed at institutional investors and therefore have a minimum initial investment of at least £10,000.
According to FE Trustnet
data, the £2.7bn Newton Balanced fund is the second most-viewed factsheet in the sector behind Jupiter Merlin Balanced.
The fund offers retail investors exposure to FE Alpha Manager Iain Stewart
, who also runs the top-performing Newton Global Balanced and Real Return portfolios.
Returns of 21.74 per cent and 102.97 per cent over five and 10 years respectively put the fund comfortably in the top-quartile in its sector. It has also been the fourth-least volatile fund over the last decade.
Newton Balanced has suffered a difficult period recently, returning just 28.26 per cent over the last three years compared with 33.27 per cent from the average Mixed Investment 40-85% Shares fund.
Stewart has a higher weighting to equities than his peer group across all three of his portfolios, a factor that has contributed to recent underperformance.
However, the manager insists that, with much of this exposure in defensive sectors such as healthcare and telecoms, coupled with a 4 per cent gold hedge, there is more than enough protection on the downside.
The fund has a minimum investment of £1,000 and a TER of 1.61 per cent.
Artemis Strategic Assets
This £864m fund is being closely watched by investors because it marks the comeback of highly regarded manager William Littlewood
Littlewood is invested in a basket of assets – not just UK equities, but also currencies, commodities, gilts and derivatives.
The fund has recently achieved its three-year track record and it is fair to say that many would find its 30.95 per cent return, versus 54 per cent from its FTSE All Share benchmark, a little disappointing.
Performance of fund vs index over 3-yrs
Source: FE Analytics
"The fund has sacrificed returns in favour of reducing volatility but it is still closely correlated to the FTSE’s rise and fall and investors should probably ask themselves if they’d be better off in a pure equity fund," said Tim Cockerill, head of collectives research at Rowan Dartington.
"It’s had a lot of inflows but this is probably down to the reputation of the manager. If it had a lesser-known manager at its head then I’d wager that it wouldn’t be the size it is.”
The fund aims to beat both cash and the market over rolling three-year periods. It has a minimum investment of £1,000, and a TER of 1.59 per cent.