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How unfettered funds in this mixed investment sector have fared over 3yrs

09 February 2017

Having compared performance of fettered and unfettered funds, FE Trustnet drills down into the individual sectors. This week we look at the IA Mixed Investment 20%-60% universe.

By Jonathan Jones,

Reporter, FE Trustnet

The IA Mixed Investment 20%-60% sector has the narrowest outperformance of unfettered funds by their fettered peers, according to FE Analytics. 

In a previous study, we revealed that fettered multi-manager funds in the IA Mixed Investment 20%-60% sector had outperformed their unfettered rivals over 10 years by 12.4 percentage points.

Unfettered funds were also beaten in the IA Flexible, IA Mixed Investment 0%-35% and IA Mixed Investment 40%-85% sectors.

Over a five-year period - as used in the IA Mixed Investment 0%-35% sector comparison last week – there are only four fettered funds with a long enough track record.

The number of fettered funds with a three-year track record rises to eight, which we have examined for this article.

Performance of indices over 3yrs

 

Source: FE Analytics

As the chart above shows, over the past three years fettered funds in the IA Mixed Investment 20%-60% (24.42 per cent) have outperformed their unfettered peers (20.32 per cent) by 4.1 percentage points.

This is the second smallest difference between the two styles over three years behind the IA Mixed Investment 40%-85% which FE Trustnet will be looking at next week.

Looking more closely at the IA Mixed Investment 20%-60% sector, 14 funds from 78 have outperformed the average fettered fund over three years.

The top performing unfettered funds is the four crown-rated HSBC Open Global Return which has produced 28.92 per cent over the last three years.



It is also the only fund in the sector to outperform the average fettered fund consistently over one, three, five and 10-year periods.

The £220m fund, run by Stephen Doran, is 35.19 per cent weighted to global developed market equities with an unusually high 12 per cent in absolute return funds.

Its top holding is Invesco Perpetual Global Opportunities (8.10 per cent) with Uni-Global Sicav (7.85 per cent) and Longview Partners Investments (7.49 per cent) rounding out the top three.

The concentrated fund has 33 holdings across multiple assets and its top 10 account for more than 50 per cent of the portfolio.

It has a clean ongoing charges figure of 1.55 per cent and currently yields 1.15 per cent according to its latest factsheet.

 

Source: FE Analytics

Also of note is the £1.4bn Old Mutual Cirilium Balanced fund run by Paul Craig, which has been the second best unfettered performer over the period.

The four crown-rated fund is currently 45 per cent weighted to equities with 9.68 per cent of that in the UK, with 24 per cent in alternatives and 30 per cent invested in cash and fixed income.


The fund has 88 holdings with CF Miton US Opportunities its top equity holding, Fair Oaks Income fund its top alternative holding and Fair Oaks Dynamic Credit its top fixed income holding.

It has an OCF of 1.24 per cent and currently yields 1.52 per cent.

The other fund returning more than 28 per cent over the last three years is the £305m Architas MA Active Intermediate Income fund run by Nathan Sweeney.

The four crown-rated Architas MA Active Intermediate Income is an unfettered fund with 10.55 per cent invested in JPMorgan US Equity, 9.13 per cent in JO Hambro Capital Management UK Equity Income and a 5.96 per cent weighting to UBAM Global High Yield Solution.

The fund, which has returned 28.1 per cent over the last three years, has an OCF of 1.43 per cent and currently yields 2.57 per cent.

All three have beaten or equalled the top performing fettered fund – Vanguard Life Strategy 40% Equity - over three years.

The five crown-rated, £1.4bn fund run by the firm’s Europe equity index team has returned 28.1 per cent over the last three years, as the below graph shows.

Performance of fund vs sectors over 3yrs

 

Source: FE Analytics

While unfettered multi-manager funds are traditionally seen as having an advantage over fettered funds, as they are able to draw from a wider pool of investment houses, fettered funds benefit from lower fees through investing in their own in-house products.

Vanguard Life Strategy 40% Equity is solely invested in in-house products, with a 19.3 per cent weighting to global bonds, 10.1 per cent UK equities and 17.8 per cent North American equities.

The fund has an OCF of 0.22 per cent and currently yields 1.21 per cent.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo 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.