The range, which has three FE Alpha Managers at the helm, has an outstanding long-term record: the three with a 10-year history are all top-decile performers in their sector over this time, while the Growth and Income funds, the two largest in the range, are also top quartile over five.
The funds are favourites among investors and advisers looking for a one-stop shop, anyone starting out on their investment career, and those who prefer to outsource manager selection to proven experts.
However, the past year has been difficult for the fund range, with the portfolios lagging their sector average over one year.
Manager John Chatfeild-Roberts told FE Trustnet the reasons for this in a recent article. In short, the team was caught out by the emerging markets crisis over the summer, and holdings in developing world debt and equities suffered.
However, the situation could be about to become even more troubling as the range is facing a serious challenger from another large institution in the market. Schroders bought Cazenove in the spring shortly after star manager Richard Buxton left for Old Mutual. One of the major assets of this brand is the Cazenove Multi Manager range, run by Marcus Brookes and Robin McDonald.
Schroders hopes to increase its top-performing range to a similar size as the Merlin one, meaning that the latter now has a serious rival to contend with.
Advisers and investors can presumably expect a marketing push to persuade them of the merits of one over the other, but what does the data say?
Over the longer term, the Merlin range has produced superior returns. The flagship of the Cazenove range is the £1.2bn MultiManager Diversity fund, which sits alongside Jupiter Merlin Income in the IMA Mixed Investment 20%-60% Shares sector.
Over the past five years it has returned 53.39 per cent against a sector average of 48.68 per cent. However, the Jupiter Merlin Income fund has made 68.35 per cent.
Performance of funds vs sector over 5yrs
Source: FE Analytics
Over three years, however, the Cazenove fund comes out on top, having returned 24.07 per cent to the Merlin one’s 18.95 per cent.
Performance of funds vs sector over 3yrs
Source: FE Analytics
The cause of this discrepancy seems to be the two funds' differing attitudes to emerging market equities.
The Cazenove fund has preferred to keep a higher weighting to the developed world, while the Merlin range has been more exposed to emerging markets.
This has resulted in the recent dip in form for the Merlin range, but is also evident in earlier years. Each year since 2008 that emerging markets have outperformed developed world markets, the Merlin fund has outperformed.
Each year that developed world equities have outperformed their emerging market counterparts, the Cazenove fund has done better.
The other major difference between the two funds is income: while the Merlin fund aims to produce a high level of income for investors, the Cazenove fund does not.
Jupiter Merlin Income is yielding 3.2 per cent while Cazenove MultiManager Diversity is yielding just 0.4 per cent.
The Cazenove team does have the £78m Cazenove Diversity Income fund, which is currently yielding 2.8 per cent, but it was only launched in December 2010 so has a limited track record.
In that time is has performed roughly in line with the Diversity fund, returning 13.52 per cent against the 13.02 per cent of the larger fund over one year.
In performance terms it is a similar story with the Jupiter Merlin Growth Portfolio and Cazenove MultiManager Diversity Tactical funds, both of which sit in the IMA Flexible Investment sector.
Both have a 10-year track record, and the Merlin fund is well ahead over that period, returning 150.02 per cent to the Cazenove fund’s 117.44 per cent. The figures represent first and second quartile returns respectively.
Performance of funds over 10yrs
Source: FE Analytics
The Merlin fund is also ahead over five years, but lags behind the Cazenove one over three years, having made 23 per cent to its competitor's 36.15 per cent.
The picture is more nuanced in the IMA Global sector, although the £812m Jupiter Merlin Worldwide portfolio has again outperformed over a decade, making 140.35 per cent against the £240m Cazenove Multi Manager Global fund's 128.33 per cent.
Over three years, however, the Cazenove fund has made 42.92 per cent, more than twice the 17.12 per cent returned by the Jupiter fund.
Cazenove Multi Manager Diversity Balanced is the range’s answer to the Jupiter Merlin Balanced fund, but the former has a very short track record and has only reached £22m in size. It is ahead of the Jupiter Merlin Balanced fund over one year, however.
There is no Cazenove alternative to the Jupiter Merlin Conservative portfolio, which sits in the IMA Mixed Investment 0%-35% Shares sector.
One of the key differences between the ranges is the types of funds that they buy. Independent financial adviser Chris Spear says that he always thinks of the Jupiter Merlin range as very “black or white”, focusing on equities and bonds.
The Cazenove range, by contrast, is happy to use alternatives and contains a number of funds that investors are likely to find harder to understand or to buy in to themselves.
The Diversity fund, for example, uses the institutional-only Majedie Tortoise fund and the Eclectica fund, an offshore hedge fund run by Hugh Hendry. Almost 30 per cent of the fund is in the "alternatives" category.
The majority of the funds in the Cazenove range are significantly smaller than those in the Merlin range, which should make it easier to buy into smaller funds, Spear notes.
The two ranges are very different propositions, which may mean that an investor is more likely to hold the funds together than single one out.
Joe Le Jehan, who co-managers a number of the funds with Brookes and McDonald, told FE Trustnet recently that the managers were beginning to get interested in emerging markets, and had opened small positions in a number of commodities funds as a result.
Spear says this illustrates that fund management is all about timing and that this is where the Merlin team has slipped up. However, he says the long-term track record is still hard to argue with.
"Apart from this year they have done really well and you cannot deny that," he said. "So anyone beginning to panic is making a mistake."
"They have just got the timing wrong. Every fund manager I have spoken to in the last two months has said that emerging markets will turn around, it’s just the timing."
Spear acknowledges that a large part of what a multi-manager is paid for is to get the timing right, which would suggest that the Cazenove managers have done better in that respect recently.
"All managers are going to get it wrong sometimes. For a long time their [Jupiter Merlin] performance has been pretty decent."
One of the drawbacks with the Merlin range is its cost: the ongoing charges are all above 2 per cent, with the lowest the Income fund’s 2.33 per cent.
The Cazenove funds all charge less than 2 per cent, with the lowest being the UK Growth fund’s 1.88 per cent. The Diversity fund charges 1.8 per cent.
