Trojan, Jupiter Merlin Growth Portfolio and Neptune Global Alpha are among the IA Flexible Investment funds that have posted some of highest average five-year returns, which is a preferred measure of performance for advisers.
A recent survey by investment research and advisory business Platforum found financial advisers say average five-year rolling returns are the second most used metric when researching funds, behind performance relative to the sector and ahead of the most recent three-year return.
How advisers independently review fund performance
Source: FE Analytics
With this in mind, FE Trustnet is viewing at the best performers from the major Investment Association sectors using this measure and is now looking at the IA Flexible Investment peer group.
To do this we took the rolling five-year total returns over the 49 quarterly periods spanning 1 January 2000 to 31 December 2016 and worked out the average return.
In the following gallery, we highlight the seven IA Flexible Investment funds with highest average rolling five-year gains (of the funds that have been around for at least 40 of the 49 periods) as well as revealing the top 20, according to this metric.
Trojan
5yr rolling return vs sector and index
Source: FE Analytics
First up we have the £3.8bn Trojan fund, which has been headed up by FE Alpha Manager Sebastian Lyon since its launch in May 2001. With 43 five-year periods of track record under its belt, the fund has made an average total return of 48.85 per cent across them. In its strongest period it made 75.99 per cent while it still generated a 20.62 per cent return over the weakest five years. Lyon is known for a cautious approach to investing that prioritises protecting investors’ capital and builds his portfolio around ‘four pillars’ of blue-chip equities, index-linked bonds, gold and cash. This has led to the sector’s lowest volatility and maximum drawdown since launch.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
Investec Managed Growth
5yr rolling return vs sector and index
Source: FE Analytics
Philip Saunders and Max King’s £127.8m Investec Managed Growth fund comes next with an average five-year rolling return of 48.89 per cent across 49 time frames. The highest return was 153.85 per cent but the lowest was an 8.50 per cent loss. The portfolio takes a fund of funds approach and is managed with the aim of providing capital growth and income. The bulk of assets are in equity funds, with most of its top 10 holdings being passive vehicles. It has 41.2 per cent of the portfolio in the US, with 13.4 per cent in Japan and 7.1 per cent in the UK.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
CF Ruffer Equity & General
5yr rolling return vs sector and index
Source: FE Analytics
The £167.3m CF Ruffer Equity & General fund, which is run by FE Alpha Manager Alex Grispos, has a track record spanning all 49 five-year time frames and has achieved an average return of 51.09 per cent. The biggest five-year return was 88.16 per cent while the lowest was 21.29 per cent. This is another fund that focuses on capital preservation and is primarily invested in global equities. It has 23 per cent of assets in the US, 21 per cent in the UK and 11 per cent in Europe, but is also holding 32 per cent in cash. Historically, the fund has had a bias to US equities but the allocation has fallen to its lowest since late 2007 on valuation grounds. The fund is top decile when it comes to annualised volatility, maximum drawdown and risk-adjusted returns since 1 January 2000.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
Jupiter Merlin Growth Portfolio
5yr rolling return vs sector and index
Source: FE Analytics
Next up we have the £2bn Jupiter Merlin Growth Portfolio, which is managed by FE Alpha Managers John Chatfeild-Roberts and Algy Smith-Maxwell alongside Amanda Sillars and David Lewis. The team is regarded as one of the most experienced in the business. Across 49 periods, the fund has posted an average rolling five-year return of 54.82 per cent, with the highest being 138.55 per cent and the lowest 14.07 per cent. It takes a fund of funds approach, with its top holdings including CF Woodford Equity Income, AXA Framlington UK Select Opportunities, Fundsmith Equity and Stewart Investors Asia Pacific Leaders.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
Margetts Venture Strategy
5yr rolling return vs sector and index
Source: FE Analytics
Toby Ricketts heads up the £81.2m Margetts Venture Strategy fund, which comes next in our study with a 55.16 per cent average five-year rolling return. The highest gain over its 49 five-year periods of track record is 143.19 per cent while the lowest was a 13.34 per cent loss. The fund is the highest risk offering in Margetts Fund Management’s four-strong risk-rated fund and is marketed with the tagline “Who dares wins”. Taking a fund of funds approach, its largest geographical allocation is to Asian Pacific (through holdings like Stewart Investors Asia Pacific Leaders and Schroder Asian Income) and emerging markets (holdings include Fidelity Emerging Markets and MI Somerset Emerging Markets Dividend); it only has one UK holding - Vanguard FTSE UK All Share Index.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
Unicorn Mastertrust
5yr rolling return vs sector and index
Source: FE Analytics
In second place is FE Alpha Manager Peter Walls’ £42.7m Unicorn Mastertrust, which has made an average rolling five-year return of 57.92 per cent over 41 periods. Its highest five-year return was 166.42 per cent and the lowest was an 8.29 per cent loss. The fund invests predominantly in investment trusts, with its portfolio being topped by the likes of Foreign & Colonial, Standard Life Private Equity, Fidelity Asian Values, Blackrock World Mining and Polar Capital. Walls takes a contrarian investment approach, which at times focuses on pricing anomalies within the investment trust space.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
Neptune Global Alpha
5yr rolling return vs sector and index
Source: FE Analytics
Topping the IA Flexible sector with an average rolling five-year return of 73.58 per cent is the Neptune Global Alpha fund, which is managed by Robin Geffen. Across its 41 periods of track record, the highest five-year return was 350.35 per cent and the lowest a 12.53 per cent loss. Geffen is a highly regarded manager, with more than 30 years’ experience in the investment industry. Square Mile, which gives the fund an ‘A’ rating, regards the fund “as one of the purest expressions of Neptune's macroeconomic views, global sector-based investment process and company analysis”. Geffen takes an unconstrained and high conviction approach when building the portfolio and will make aggressive changes should Neptune's investment outlook change. It currently has 57.9 per cent in North America and 21.2 per cent in emerging markets, with only 2 per cent in the UK.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
