Low-risk investments are looking increasingly appealing as concerns over inflation, interest rates and conflict in Europe are creating an uncertain future for the global economy.
Multi-asset funds, which spread holdings across a variety of different asset classes to diversify risk, are generally a good option when investors are looking to lower volatility.
However, the sector is saturated by large funds, leading some small yet successful portfolios to go unnoticed by many investors.
Here, Trustnet looks at three multi-asset funds with FE fundinfo Alpha Managers at the helm and a top five FE fundinfo Crown rating, yet are still at the relatively small with less than £500m in assets under management (AUM).
Previously, Trustnet has explored overlooked funds in the Asian, Global, European and UK markets.
Janus Henderson Global Responsible Managed
The Janus Henderson Global Responsible Managed fund avoids investing in companies that Alpha Manager, Hamish Chamberlayne deems unethical but still has many of the same top equity holdings.
Like other portfolios in the sector, it holds most of its assets in the US (41.6%) and technology (22.8%), so investors do not need to fear missing out on fast growth because of its environmental, social and governance (ESG) mandate.
It’s £437.8m AUM makes it one of the larger funds in the series, but its size is still small in comparison to larger peers in the sector and allows the manager to spread risk across a much broader scale of holdings.
With investments in more than 200 companies, the fund has more protection if the valuation of one of its assets plummets than other more concentrated rivals.
James Sullivan, head of partnerships at Tyndall Investment Management, said: “Being multi-asset in composition, it aims to balance returns with risk, and over the longer term has achieved great success, comfortably outperforming its IA 40-85% Mixed Investments peer group over 10 years.”
Over the past decade, the fund is up almost 156.9% but it has declined 9.2 percentage points since the start of the year due to a “shift in sentiment back towards value” according to Sullivan.
Total return of fund vs sector over ten years
Source: FE Analytics
He added: “The structural shift towards a more responsible way of investing is unlikely to dissipate, and if this wave of less positive sentiment towards growth as an investment style passes, then it is likely we will witness a renaissance in performance.”
Chamberlayne specializes in ESG investments, also managing Janus Henderson’s Global Sustainable Equity and Horizon Global Sustainable Equity portfolios.
Jupiter Merlin Conservative Portfolio
As its name suggest, the Jupiter Merlin Conservative portfolio takes a cautious investment approach, with 60.2% of the fund’s holdings in fixed income.
The fund run by John Chatfeild-Roberts has returned 48.3% over the past 10 years, not as impressive as some all-equity portfolios but investors have had a steady stream on inflows through more reliable asset allocations.
Analysts at Square Mile said that the fund has been perceived as one of the risker choices in the Mixed Investment 0-35% Shares sector, but that its “risk research has shown that the management team has taken no greater risk than the peer group.”
Total return of fund vs sector over 10 years
Source: FE Analytics
Like many funds, valuations declined in January but its careful risk taking led to a less severe drop than others in the sector – the portfolio was still up a modest 0.9% over the past year whilst others in its peer group made overall losses.
Square Mile analysts added: “The overall approach is weighted to qualitative information supported by statistical research and it is this skill set that gives it a greater differential to many other competitors in this market.
“Having reviewed these funds over a number of years now, our view is that the Jupiter Independent Funds Team offer a very strong range of actively managed fund solutions and have proven to be adept at combining both macro and fund analysis in one packaged solution.”
MGTS Sentinel Enterprise
Despite its small size of £88.4m, the MGTS Sentinel Enterprise fund has got a lengthy lead on the rest of the Flexible Investment sector. It fell slightly in January with the rest of the market but is still an impressive 50.3 percentage points above its peer group over the past five years.
Total return of fund vs sector over five years
Source: FE Analytics
Alpha manager, Gerrit Smit, who joined the fund in 2016, has allocated 44.8% of the fund’s holdings into non-cyclical consumer assets, an appealing investment area as high inflation creates economic uncertainty.
However, it is not afraid to invest in some of the big technology names, with top holding Alphabet (6.8%) joined by Amazon and Microsoft among its top 10 positions.
Around 22% of the portfolio is in tech stocks, while some 76.5% is in US companies. This has been a strong trade over the past decade, but investors will need to decide whether this run can continue, or if the downward trend in recent months will persist.