Several funds have jumped straight in with a five crown rating in the latest semi-annual review of the FE Crown Ratings, with Asian and multi-asset funds being among those scooping the top score.
The FE Crown Fund Ratings are a quantitative measure designed to distinguish between funds that are strongly outperforming their benchmark and those that are not.
Analysts at FE build a score based on the fund’s performance over the previous three years, looking at alpha, relative volatility and consistent performance.
The top 10 per cent of funds are awarded five crowns, while the next 15 per cent receive four crowns and each of the remaining three quartiles given three, two and one crown respectively.
The ratings are rebalanced semi-annually in January and July.
Source: FE Analytics
Below FE Trustnet takes a closer look at some of the newly-rated funds.
Fidelity Asian Dividend
Jochen Breuer’s Fidelity Asian Dividend fund has been awarded a five crown rating after launching in 2013.
The fund, which aims to provide income and long-term capital growth, invests primarily in companies in the Asia-Pacific region.
Over three years the fund has returned 44.14 per cent, with annualised volatility of 13.72 per cent.
The £5m fund had a particularly strong 2016, returning 29.47 per cent, after a flat year’s performance in during the prior year.
Fidelity Asian Dividend performance over 3yrs to end-2016
Source: FE Analytics
The fund has overweight positions in Hong Kong – its biggest country weighting at 23.0 per cent – and Thai companies. Chinese and Australian companies also make up a significant portion of the portfolio.
The largest sector weighting is to the financials sector with 19.2 per cent of the fund’s holdings, although this represents an 8.9 per cent underweight compared with the MSCI AC Asia Pacific ex Japan. Its biggest overweight position is in the telecommunications sector, which makes up 14.3 per cent of the portfolio.
The fund has an ongoing charges figure (OCF) of 1.8 per cent.
Standard Life Investments Enhanced Diversification Growth
Standard Life’s £180.3m Enhanced Diversification Growth fund also enters the FE Crown rating rankings with a five crown rating.
The fund is overseen by the multi-asset investing team and aims to provide a long-term total return through capital appreciation and income, investing across a range of different asset types.
It has returned 13.78 per cent over three years to 31 December 2016 and has annualised volatility of 6.88 per cent.
After gains of 7.72 per cent and 6.55 percent in 2014 and 2015 respectively, the fund made a loss of 0.87 per cent last year.
SLI Enhanced Diversification Growth over 3yrs to end-2016
Source: FE Analytics
The fund is split into market return assets and enhanced diversification strategy. The larger share of the portfolio is dedicated to market return assets, chiefly through equities. The enhanced diversification strategy include interest rate and currency plays.
“For a portfolio that is built to be durably diversified, we expect this environment of heightened change to present additional opportunities for our managers, given the flexibility of our mandate and our long investment time frame,” the fund’s management team wrote in November.
The fund has an OCF of 1.15 per cent.
Old Mutual Invesco Perpetual Asian
The Old Mutual Invesco Perpetual Asian fund has been awarded a five crown rating after securing a three-year track record.
The £68.9m fund is overseen by Stuart Parks and aims to achieve capital growth through investment in companies in Asia ex-Japan and Australasia.
It has returned 48.41 per cent in the three years to 31 December 2016 with annualise volatility of 15.28 per cent. The fund has an OCF of 0.75 per cent.
The fund returned 36.83 per cent last year, after a 1.49 per cent loss in 2015 and a 10.10 per cent gain in 2014.
Old Mutual Invesco Perpetual Asian over 3yrs to end-2016
Source: FE Analytics
The £700.3m fund mirrors Parks’ Invesco Perpetual Asian fund, which has a longer track record and has also received a five crown rating.
“We seek to invest in companies whose share prices are substantially below our estimate of fair value,” Parks and co-manager William Lam noted in the fund’s latest factsheet.
“The fund’s exposure to China reflects a preference for areas exposed to the ‘new economy’ and favourable structural growth trends in domestic consumption.”
The fund has an OCF of 0.75 per cent.
L&G Multi-Index funds
Three L&G Multi-Index funds achieved five crown ratings. The funds seek to provide a combination of growth and income within a pre-determined risk profile.
The best performer over the three years to 31 December 2016 was Multi-Index 5, which returned 27.88 per cent, with annualised volatility of 6.60 per cent.
Multi-Index 3 returned 21.86 per cent over the three-year period with annualised volatility of 3.98 per cent. Meanwhile Multi-Index 4 was up by 24.86 per cent over the three years with annualised volatility of 5.14 per cent.
The best performer of 2016 was the L&G Multi-Index 5 with a gain of 14.44 per cent, with Multi-Index 3 and Multi-Index 4 returning 10.10 per cent and 11.68 per cent respectively.
L&G Multi-Index funds over 3yrs to end-2016
Source: FE Analytics
Writing about the Multi-Index range, Square Mile Research noted: “The group has a proven track record in building and managing risk aware multi asset funds, as can be illustrated by the success of its long running With Profits fund.
“Additionally, L&G is a market leader within index funds and one of the largest providers in the UK. They have both depth of resource and a strong and diverse index product range.”
Each fund has an OCF of 0.31 per cent.