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The top-performing pension funds revealed

FE Trustnet looks at the managed pension funds in the four ABI Mixed Investment sectors that have outperformed their peers over a three-year period.

Jenna Voigt

By Jenna Voigt, Features Editor, FE Tru...
Thursday October 24, 2013

It is vital for investors to keep an eye on their pension funds to ensure they end up with the size of pot they need when they retire.

As FE Trustnet has previously highlighted, many of our readers are concerned their pension won’t be able to support their lifestyle in their twilight years.

Pension schemes have come under harsh criticism recently, with auto-enrolment pushing many people into underperforming pension funds.

Earlier this week, FE Trustnet highlighted the pension funds with a track record of underperforming; here we look at those that have delivered the goods

We focused on managed funds, which sit in one of four ABI Mixed Investment sectors, over a three-year period.

As these funds are comprised of multiple asset classes, mainly equities and bonds, we have chosen to benchmark the funds against their sector, defining the outperforming funds as those that have beaten their peers over the last three years.

Mixed Investment 0%-35% Shares

Managed portfolios from Mayfair-based asset manager Jupiter have dominated the top of the performance table in the Mixed Investment 0%-35% Shares sector.

Jupiter UK Growth and Jupiter Distribution make up eight of the top-10 pension funds in the sector.

Ten best-performing pension funds

Fund 3 yrs (%)
AXA Wealth Jupiter UK Growth 56.35
FL Jupiter Distribution AP 24.78
FL Jupiter Distribution EP 23.98
Scottish Widows Jupiter Distribution 23.22
MetLIFe Managed Defensive Portfolio 23.18
Standard Life Jupiter Distribution 23.15
Zurich Jupiter Distribution 23.13
MetLife Jupiter Distribution 22.79
L&G Jupiter Distribution 22.77
MetLife Defensive Managed Portfolio 22.53

Source: FE Analytics

The best performing of these portfolios is AXA Wealth Jupiter UK Growth, which has returned 56.35 per cent over the last three years while the sector picked up 16.76 per cent.

Performance of fund vs sector over 3yrs


Source: FE Analytics

The fund is run by star Jupiter managers Ian McVeigh and Steve Davies. It has a total expense ratio of 1.95 per cent.

The Metlife Managed Defensive Portfolio is another strong performer, as is the Clerical Medical Fidelity Defensive Managed fund, managed by Rita Crewel.

Mixed Investment 20%-60% Shares

Much like the more cautious 0%-35% Shares sector, one fund has dominated the performance tables in the 20%-60% Shares sector over the last three years.

The Invesco Perpetual Distribution fund, run by star bond managers Paul Causer and Paul Read, makes up six of the top-10 pensions in the sector.

The best-performing of these is part of Aviva’s pension range. The fund has made 40.06 per cent over the last three years while the sector gained 19.61 per cent. Investors would have made slightly less using the fund through HLL (The Hartford), followed by Fidelity and MetLife.

The second-best performing portfolio is the FL Investec Diversified Income pension fund, run by Investec’s John Stopford. The £824.4m pension fund has gained 39.29 per cent over the last three years.

The FL Kames Ethical Cautious Managed, FL AXA Ethical Distribution and FL Ethical Distribution funds make up the rest of the top-10.

Mixed Investment 40%-85% Shares

The best-performing fund over the last three years is the Zurich Managed Income fund, which has gained 42.42 per cent over the period. The underlying mixed investment sector made just half that amount, at 21.64 per cent.

Performance of fund vs sector over 3yrs


Source: FE Analytics

The fund, headed up by Threadneedle UK Equity Income manager Richard Colwell, is comprised of a mix of UK and international blue chip firms such as GlaxoSmithKline, AstraZeneca and Royal Dutch Shell. The majority of the pension is invested in the UK, but it does have exposure to Europe and select international equities.

Other funds worth noting in the sector are the Standard Life Ethical pension run by corporate bond manager Roger Sadewsky, and the HLL Adventurous Growth Portfolio, managed by the Hartford Investment Advisory Group. Both pensions made roughly 40 per cent for investors over the last three years.

Investors can also access a number of underlying pension funds through multiple providers, and the Invesco Perpetual Managed pension has held up over the medium- and long-term through providers such as Scottish Widows and Phoenix.

The key difference here is the charges pension providers pass on to their clients. For example, investors in the Old Mutual Managed pension would have fared better using AXA Wealth than they would have done with the Skandia version.

The AXA Wealth version made 36.54 per cent over three years while the Skandia fund gained 33.11 per cent, according to FE Analytics.

Flexible Investment

The Flexible Investment sector, which is considered the most aggressive mixed investment sector because portfolios can hold 100 per cent in equities, is more varied in terms of top-performers than the other sectors; however, the Invesco Managed pension fund through Pru, Skandia, Aviva and Zurich dominates.

The best-performing pension fund in this sector is the Aviva Variable Annuity pension, with returns of 65.56 per cent over the last three years.

The sector made 25.35 per cent in this time, according to FE Analytics.

The niche Medical Sickness Society Managed pension fund is the second-placed portfolio in the Flexible sector, with returns of 47.48 per cent.

The Fidelity Lifestyle range of pensions and the Baillie Gifford Managed pension are also worth noting, as the funds have consistently outperformed their peers, though they didn’t make it into the top-10 pension funds in the sector.

This article is for professional investors only. You will be redirected to the News & Research homepage in seconds. If you are having problems getting to the page, please click here
Data provided by FE. Care has been taken to ensure that the information is correct, but FE neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.

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