Asset managers Threadneedle, Ruffer and Newton oversee some of the best performing, risk-adjusted, multi-asset funds compared against their peers, according to data from FE Analytics. 
Multi-asset solutions have seen a significant uplift in popularity over the past decade as the demand for more diversified portfolios has grown amongst investors.
Having previously looked at open- and closed-ended fund sectors in the UK, FE Trustnet compares the risk-adjusted returns of funds in the various multi-asset sectors over the 10 years to 31 December 2016.
Unlike previous studies, we have compared the funds with their peer average rather than using a benchmark.
IA Mixed Investment 0%-35%
Three funds in the IA Mixed Investment 0%-35% space have beaten the sector average return (37.95 per cent) while experiencing lower annualised volatility (5.59 per cent), according to FE Analytics.
Funds in this sector can have a maximum of 35 per cent in equities and therefore tend to employ a more cautious approach sacrificing some potential return for less volatility.
Risk/return over 10yrs
Source: FE Analytics data as at 31/12/16
The first is the £62.6m FP Matterley Regular High Income fund run by Chris Ainscough and Jeremy Spain, which has been the least volatile fund in the sector.
The fund, which has a clean ongoing charges figure (OCF) of 1.08 per cent and a current yield of 4.61 per cent, has returned 56.79 per cent over the last decade while experiencing 4.25 per cent volatility.
Threadneedle Defensive and Architas MA Active Moderate Income round out the trio of funds outperforming the sector with lower volatility.
At the other end of the spectrum, the £75.4m Henderson Multi-Manager Diversified has been the most volatile fund in the sector (10.36 per cent) while it is in the bottom quartile for total return (27.68 per cent).
The best performer in the sector is the Threadneedle Navigator Cautious Managed fund run by Alex Lyle, which has returned 72.68 per cent though it has been more volatile than the average peer (6.41 per cent).
IA Mixed Investment 20%-60%
Four funds from 44 in the IA Mixed Investment 20%-60% sector outperformed their average peer with lower volatility over the past 10 years.
Funds in this sector must hold a minimum of 20 per cent in equities (up to a maximum of 60 per cent) and typically represent a more balanced approach, looking to achieve reasonable returns with a moderate level of risk.
Risk/return over 10yrs
Source: FE Analytics data as at 31/12/16
The fund with the lowest volatility over the last decade is the £925m Schroder MM Diversity, run for the majority of the period by Marcus Brookes and Robin McDonald.
Over the 10 years to end-2016, the fund has returned 63.11 per cent, compared with the sector average of 45.44 per cent. It has also experienced less volatility of 5.54 per cent compared with 7.15 per cent for the sector average.
Writing about the fund, Square Mile Research said: “The managers have proven their ability to successfully manage money across a variety of market conditions and are particularly mindful of capital volatility.”
CF Miton Cautious Multi Asset, HSBC Open Global Return and Henderson Cautious Managed make up the other three funds that have beaten the average returns of their peers with lower volatility.
The best performing fund over the past decade is the £3.1bn CF Ruffer Total Return run by FE Alpha Managers David Ballance and Steve Russell.
It has returned more than double the average fund in the peer group (119.80 per cent) and has managed this with only 9 basis points more volatility.
AXA Global Distribution is another high performer, retuning 106.63 per cent over the last decade, though it has been slightly more volatile at 9.71 per cent.
However, the most volatile fund in the sector is FP New Horizon Balanced Income & Growth, run by Richard Foley. It has experienced 12.55 per cent volatility - 5.4 per cent higher than the peer average - while making a return of 62.69 per cent for investors.
IA Mixed Investment 40%-85%
On average, funds in the IA Mixed Investment 40%-85% sector returned 59.74 per cent with annualised volatility of 10.46 per cent over the past 10 years.
Compared with other sectors the spread is wider, which is to be expected as funds in this sector can have the highest weighting to equities and therefore generally take on more risk.
Risk/return over 10yrs
Source: FE Analytics data as at 31/12/16
There are three funds outperforming the sector significantly with lower volatility, including best performer CF Ruffer European.
The £223m fund run by Claire Titmarsh and Simon Mountain has returned 128.67 per cent while experiencing volatility of 8.91 per cent.
It has narrowly outperformed McInroy & Wood Balanced, which has returned just 13 basis points fewer than the Ruffer fund, however, it has been more volatile (10.32 per cent).
The third fund to have returned more than 100 per cent over the past decade with less volatility than the peer average is EdenTree Higher Income, run by FE Alpha Manager Robin Hepworth.
The £355m has returned 110.35 per cent to investors over the last 10 years with volatility of 8.60 per cent – the third lowest in the sector.
The fund experiencing the least volatility is the £114m TM Fulcrum Diversified Growth, though its returns are the poorest in the sector at 21.4 per cent.
Conversely, the most volatile fund was the £9m IFSL James Hambro Penrhos which has experienced 13.72 per cent volatility while returning 97.53 per cent to investors.
It has been narrowly more volatile than the Scottish Friendly Managed Growth fund (13.69 per cent) run by Colin McLean, which is also among the bottom quartile in the sector for returns (36.49 per cent).
IA Flexible Investment
In the IA Flexible Investment, which has no restrictions on the proportion of the portfolio a fund may hold in equities, the average return is 57.17 per cent with volatility of 12.04 per cent.
Risk/return over 10yrs
Source: FE Analytics data as at 31/12/16
However, there are some big outliers in this sector, as the dispersion between investment strategies means there are some that have a focus on some capital preservation, while others are invested solely for growth and returns.
For example, the least volatile fund – the £165m CF Ruffer Equity & General run by FE Alpha Manager Alex Grispos – holds 32 per cent in cash.
“Our approach to risk management has remained constant: the fund is structured as a triangle, at the top we own a small number of larger positions which we consider to be the most mispriced and towards the bottom we have many smaller holdings, which are characterised by higher risk,” the manager wrote in the most recent factsheet.
“In essence, we are ‘trading’ some of the fund’s upside for a greater margin of safety in down markets.” The fund has returned 108.62 per cent to investors over the period with volatility of 7.20 per cent.
Also among the least volatile is Troy Asset Management’s £3.6bn Trojan fund run by FE Alpha Manager Sebastian Lyon which has a high weighting to gold - currently representing 9 per cent of the portfolio - making it a lower-risk prospect.
The fund has returned 85.56 per cent over the past decade with volatility of 7.29 per cent.
Conversely, the most volatile fund is the £77m Neptune Global Alpha (17.57 per cent), run by Robin Geffen, which currently has 98.5 per cent in equities and 1.5 per cent in cash.
The best performer in the sector meanwhile is Newton Osprey run by Robert Shelton, which has returned 166.17 per cent with volatility of 13.23 per cent.