Baillie Gifford Managed is the most consistent IA Mixed Investment 40-85% Shares fund of the past decade, beating its sector average in nine of the past 10 calendar years.
Of the 82 funds in the sector with a track record long enough to be included in the study, another five funds outperformed their peer group composite in eight of the past 10 years, while 21 managed it in seven.
Performance of funds vs sector
Source: FE Analytics
Iain McCombie of Baillie Gifford Managed described the fund as “a one-stop shop for Baillie Gifford’s best ideas”, saying it is suitable for someone who wants to increase the value of capital over the long term, but finds a 100 per cent allocation to equities “a bit too racy”.
He added there are no “bells and whistles” in the non-equity part of the portfolio, which currently accounts for just over a quarter of assets under management – it is just held in bonds and cash.
“We think these asset classes are going to complement each other,” he explained. “The equities will provide the growth, while the bonds give some income and help dampen down the volatility on the fund.”
The fund’s exposure to each asset class is reviewed by a dedicated team at Baillie Gifford on a quarterly basis. McCombie said the mixture remains fairly constant as the group does not claim to have an advantage when it comes to asset allocation – instead, 90 per cent of the fund’s long-term outperformance comes from stockpicking.
Its managers are bottom-up investors and take no view on what the market will do over the next five to 10 years. The only key theme they look for is long-term growth – meaning companies that can increase their earnings over the next five or 10 years.
Data from FE Analytics shows Baillie Gifford Managed has made 172.95 per cent over the past decade, compared with 101.31 per cent from the IA Mixed Investment 40-85% Shares sector.
Performance of fund vs sector over 10yrs
Source: FE Analytics
It is £3.6bn in size and has ongoing charges of 0.43 per cent.
Of the funds that beat the sector in eight of the past 10 years, IFSL James Hambro Penrhos made the highest total return over the decade-long period, at 143.96 per cent. However, the portfolio, which contains a mixture of equities, bonds and other funds, is not widely available to investors.
One that is is Janus Henderson Inst Global Responsible Managed, up next with gains of 137.04 per cent. The fund invests in the bonds and equities of companies that are responsibly run, giving due consideration to environmental, social & governance issues. It also avoids investing in firms that manager Hamish Chamberlayne believes can have a negative impact on the development of a sustainable global economy.
While global growth is slowing, Chamberlayne remains optimistic about the fund’s prospects, saying: “Sustainability issues will continue to grow in importance, with active managers making a positive impact by consciously allocating capital towards companies that are contributing to a more sustainable planet, and away from those doing harm.
“To quote the chief executive of the World Wildlife Fund, ‘we are the first generation to know we are destroying our planet and the last one that can do anything about it’.
“When we think about sustainability, we see a world of opportunity.”
The fund has just over one-fifth of assets in fixed interest, while the rest of the portfolio is relatively diversified, with its top-10 accounting for less than 15 per cent of assets.
It is £233m in size and has ongoing charges of 0.84 per cent.
There is little to choose from in terms of total return from the final three funds that beat the sector in eight of the past 10 calendar years, with each one returning between 122 and 130 per cent over the time in question.
Performance of funds vs sector over 10yrs
Source: FE Analytics
Lazard Managed Balanced aims to deliver capital growth while maintaining a reasonable yield.
It employs both top-down and bottom-up active investment management through the use of dynamic tactical asset allocation and stockpicking equity and bond strategies.
The fund invests in both UK and global equity markets, with bonds currently making up less than 9 per cent of assets. It is currently overweight oil & gas and financials, which together make up 40 per cent of assets.
In the most recent note to investors, managers Alan Custis, Andrew Lacey and Benjamin Böhme said that lowly valuations of UK equities were unjustified, even when factoring in current market risks, and that important milestones in the coming months could refocus investors’ attention on the positive fundamentals.
The £35.2m Lazard Managed Balanced fund is yielding 2.6 per cent and has ongoing charges of 0.88 per cent.
Square Mile Investment Consulting & Research described AXA Framlington Managed Balanced as “essentially a global equity fund” that uses allocations to bonds and cash to help dampen the overall level of volatility.
“The fund's asset allocation tends to be adjusted on a gradual basis, but historically has been towards the upper end of the fund’s maximum permitted equity limit of 85 per cent, with the intention of stock selection being the primary driver of returns,” it said.
Jamie Hooper, also of the AXA Framlington UK Growth fund, runs the UK equity portion of the portfolio, while Nick Hayes, who runs a number of AXA’s bond funds, is responsible for the fixed income allocation.
The £988.2m fund has ongoing charges of 0.7 per cent.
Last up is Architas MA Active Progressive, which aims to deliver capital and income growth over the medium to long term and sits in the middle of a range of six risk-targeted multiasset, unfettered funds-of-funds run by Architas.
Architas uses EValue’s stochastic modelling techniques which take into account a certain degree of randomness or unpredictability when making predictions.
“The approach is different from a number of providers operating in this area as it offers a more forwardlooking process that is not founded predominantly on historical data,” said the team at Square Mile.
Meanwhile, Architas’ investment team is responsible for formulating the tactical views of the group.
“The managers have a significant amount of flexibility with the tactical allocation, however, they must ensure that on a forward-looking basis the fund stays within its specified risk target,” Square Mile analyst added.
“We believe the resources at Architas create an ideal framework for the managers to deliver a robust range of risk-targeted funds.”
The £194m Architas MA Active Progressive fund has ongoing charges of 1.43 per cent.