Funds in these sectors offer investors a one-stop shop for diversification, by giving them exposure to numerous asset classes such as equities, bonds, property and derivatives.
Here are three standout performers that score strongly across FE’s three major ratings: FE Crown Fund Rating, FE Alpha Manager rating and membership of AFI portfolios.
CF Miton Special Situations Portfolio
- FE Crowns: 2
- FE Alpha Manager: Yes
- AFI portfolios: Cautious, Balanced, Aggressive
However, Gray’s stellar long-term record, combined with his reputation for protecting effectively against the downside, means that he scored highly with the AFI panel, and appears in all three portfolios as a result.
Performance of fund vs sector and index since launch
Source: FE Analytics
CF Miton Special Sits has returned 307.97 per cent since its launch in late 1997, beating its IMA Flexible Investment sector by almost 200 percentage points.
The fund does not use a benchmark, but by point of reference the FTSE All Share has delivered 127.2 per cent over the period.
This is only half the story though; the fund has outperformed with significantly less volatility and downside risk than its peers, performing particularly well during the dotcom crash and 2007 to 2009 financial crisis.
Out data shows that Gray’s fund has an annualised volatility of 9.47 per cent and a max drawdown of 26.43 per cent over a 15-year period.
By contrast, the IMA Flexible Investment sector average has a volatility of 13.62 per cent and a 42.3 per cent max drawdown.
Gray is currently cautiously positioned, with a significant underweight in equities and a 30 per cent cash weighting.
CF Miton Special Sits is a fund of funds. Top-10 holdings include Schroder Asian Bond and GLG Japan Alpha Core.
It requires a minimum investment of £1,000 and has an ongoing charges figure of 1.73 per cent.
Consistent Practical
- FE Crowns: 5
- FE Alpha Manager: Yes
- AFI portfolios: None
Performance of fund vs sector and benchmark over 3yrs
Source: FE Analytics
The £36m portfolio is up 43.96 per cent over three years, compared with 20.5 per cent from its sector average and 29.39 per cent from its FTSE All Share benchmark.
Ashfield has done this with significantly less volatility, which sees it push even further ahead on a risk-adjusted basis.
According to FE data, Consistent Practical has a Sharpe ratio of 0.97 over three years, while the average Mixed Investment 40%-85% Shares fund has a score of 0.27 per cent.
The five crown-rated fund targets capital growth and a rising level of income by investing in closed-ended vehicles, or investment trusts. The yield is currently at 3.64 per cent.
Ashfield runs a highly concentrated portfolio, with more than 50 per cent in the top-10 holdings. These include the British Assets IT and London & St Lawrence IT.
The fund has an OCF of just 1.16 per cent, making it one of the cheapest of its kind.
Investment trusts tend to be cheaper than their open-ended rivals, which has helped management to keep costs to a minimum. It requires a minimum investment of £1,000.
Ashfield has run the fund since September 2009.
The AFI panellists are yet to include it in their recommended portfolios, perhaps as a result of its small size.
Information on the fund is not easily available, which may also go some way to explaining why the panel has looked elsewhere.
IM Matterley Regular High Income
- FE Crowns: 5
- FE Alpha Manager: No
- AFI portfolios: Cautious
It is a top-quartile performer over one, three and five years, and with a yield of 3.96 per cent, is one of the highest yielders in the sector as well.
Performance of fund vs sector over 5yrs
| Name | 1yr returns (%) | 3yr returns (%) | 5yr returns (%) |
|---|---|---|---|
| IM - Matterley Regular High Income |
11.48 | 26.03 | 44.34 |
| IMA Mixed Investment 0%-35% Shrs | 7.6 | 16.33 | 25.79 |
Source: FE Analytics
As well as outperforming, the fund has also been less volatile than its sector.
Evans and Harris currently have 33 per cent in equities, with the rest split between bonds, convertible bonds and cash. It is a highly diversified portfolio, with less than 20 per cent invested in the top-10. The three biggest holdings are all gilts.
The five crown-rated fund pays out a dividend quarterly, in March, June, September and December.
IM Matterley Regular High Income requires a minimum investment of £1,000 and has an OCF of 1.11 per cent.
To find other funds that excel across a number of FE performance measures, click here.
In the previous article in the series, we looked at funds that tick all the boxes in the IMA UK Equity Income sector.