Ruffer European, McInroy & Wood Income and EdenTree Higher Income are some of the IA Mixed Investment 40%-85% Shares sector’s top performers when it comes to rolling five-year returns, which is a key metric used by advisers.
Platforum, the investment research and advisory business, recently found financial advisers rate average five-year rolling returns as the second most important metric when researching funds. This comes after 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 took the IA Mixed Investment 40%-85% Shares sector’s rolling five-year total returns over the 49 quarterly periods spanning 1 January 2000 to 31 December 2016 and worked out the average return, to find out which balanced multi-asset funds come out on top.
In the following gallery, we highlight the five balanced multi-asset funds with highest average rolling five-year gains (of the funds that have been around for at least 25 of the 49 periods) as well as revealing the top 25 based on this metric.
McInroy & Wood Income
5yr rolling return vs sector and index
Source: FE Analytics
In fifth place, we have the £301.7m McInroy & Wood Income fund, which is managed on a team basis. The fund has 49 five-year periods of track record and has posted an average rolling return of 50.38 per cent across them; the highest was 94.62 per cent while the lowest stands at 21.17 per cent. The firm says the primary objective across its portfolios is “the preservation of the real value of clients’ capital and its purchasing power over time”. Reflecting this, it is in the sector’s top quartile when it comes to metrics such as annualised volatility, maximum drawdown and risk-adjusted returns. Top holdings include Royal Dutch Shell, National Grid and Rio Tinto, as well as exposure to gold.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
Newton Global Balanced
5yr rolling return vs sector and index
Source: FE Analytics
Simon Nichols’ £708.8m Newton Global Balanced fund comes next after making an average rolling five-year return of 50.84 per cent over the 49 periods examined. Over this time, the highest five-year gain was 114.14 per cent but the lowest was just 2.37 per cent. The fund is managed using Newton’s thematic approach, which analyses the forces driving long-term change in the world and their impact on financial markets. This tends to lead to more cautious positioning and the fund has some of the sector’s lowest volatility numbers over the period examined in this article. Top holdings include Royal Dutch Shell, UK gilts and British American Tobacco.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
McInroy & Wood Balanced
5yr rolling return vs sector and index
Source: FE Analytics
McInroy & Wood has a second entry on the shortlist – the team-managed McInroy & Wood Balanced fund. This £638.9m portfolio has made an average five-year rolling return of 54.13 per cent over 49 periods of track record; over this time, the highest gain was 94.62 per cent while the lowest was 14.97 per cent. Like McInroy & Wood Income, this fund is managed with capital preservation in mind and, again, is in the IA Mixed Investment 40%-85% Shares sector’s top quartile for annualised volatility, maximum drawdown and risk-adjusted returns. Its top holdings are Mettler-Toledo, Royal Dutch Shell and Paychex, while the portfolio also has 4.8 per cent in gold. While it is managed along the same lines as the income fund, McInroy & Wood Balanced’s mandate means there is more of a focus on capital growth.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
EdenTree Higher Income
5yr rolling return vs sector and index
Source: FE Analytics
In second place is the £361.1m EdenTree Higher Income fund, which is headed up by FE Alpha Manager Robin Hepworth (who was joined by co-managers David Katimbo Mugwanya and Thomas Fitzgerald in 2016). Over 49 five-year periods, the average return has been 55.73 per cent, with the highest standing at 92.98 per cent and the lowest 27.94 per cent. This is another fund placing capital preservation at its core and it has a focus on long-term value. Essentially, the managers seek to buy companies with an identifiable and sustainable competitive advantage at a cheap price. This has led stocks such as GlaxoSmithKline, Royal Dutch Shell and BT Group being among its top holdings.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
CF Ruffer European
5yr rolling return vs sector and index
Source: FE Analytics
Topping the table is Claire Titmarsh and Simon Mountain’s £225m CF Ruffer European fund (although they only took over in 2016 – prior to this it was headed up by Tim Youngman for 13 years). The fund has made an average rolling five-year return of 87.66 per cent over its 39 periods of track record, although the above chart shows how the bulk of the outperformance was at the start of this time frame. Its highest five-year return has been 202.28 per cent; the lowest was 27.94 per cent. CF Ruffer European is a best ideas stock picking fund that reflects Ruffer’s view of the macro and market. The portfolio is divided among four types of holding – compounders, special situations, technology/intellectual property and asset allocation, which includes bonds, gold and put options – with top holdings including Aurelius, index-linked gilts and Deutsche Post.
Cumulative return to 31 Dec 2016 vs sector and index
Source: FE Analytics
Source: FE Analytics