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The top performing adviser-backed funds so far this year

02 June 2017

After a difficult 2016, the AFI portfolios have performed better in 2017 with strong performances from a number of fund managers.

By Rob Langston,

News editor, FE Trustnet

Old Mutual UK Smaller Companies, Schroder Asian Alpha Plus and Marlborough Special Situations are among some of the best performing funds chosen by FE Adviser Fund Index (AFI) panellists so far in 2017.

The AFI portfolios have responded strongly after a challenging 2016, with the most aggressive beating key UK benchmarks in 2017.

Last year all the portfolios – composed of funds recommended by a panel of leading IFAs –underperformed the FTSE 100 and FTSE All Share, as many managers were caught out by several developments in markets. Indeed, last year the FTSE 100 and All Share outperformed the adviser-constructed indices for the first time since 2013.

However, so far in 2017 the AFI Aggressive has outperformed both UK indices with a gain of 9.07 per cent.

In comparison, the FTSE All-Share has risen by 8.16 per cent and the while the blue-chip FTSE 100 index, which has continued to reach new levels in 2017, is up by 7.3 per cent.

Just behind the FTSE 100 during the first five months of the year is the AFI Balanced index, which has risen by 7.13 per cent. The AFI Cautious index, meanwhile, is up by 5.09 per cent so far in 2017.

Performance of indices YTD

 

Source: FE Analytics

The portfolios are populated by the FE AFI panel of leading advisory firms who submit a maximum of 10 funds for inclusion in each band and are weighted. Panellists must assume that the client is saving for a pension to be taken at age 65.

The AFI Aggressive portfolio is made up of funds suitable for a person in their late 20s; AFI Balanced funds are chosen for investors in their mid-40s; and, AFI Cautious is made up of funds for those in their late 50s.

Below we take a look at some of the best performing funds from each of the portfolios in 2017, so far.


AFI Aggressive

The AFI Aggressive portfolio, which contains 121 funds, has been boosted by several top performing managers during the first part of the year with returns of more than 20 per cent.

Performance of funds YTD

 

Source: FE Analytics

The best performing fund in the portfolio so far this year is the £1.1bn Old Mutual UK Smaller Companies fund, managed by FE Alpha Manager Dan Nickols.

The three crown-rated fund has returned 23.04 per cent during the first five months of the year, compared with a 17.22 per cent return for the average IA UK Smaller Companies fund.

It is joined at the top by sister fund Old Mutual UK Dynamic Equity overseen by Luke Kerr. The £539.6m, four crown-rated fund has delivered a 21.51 per cent gain since the start of the year. The fund aims to achieve capital appreciation by taking long and short positions in UK equities outside the FTSE 100.

Outperformance of stocks outside the FTSE 100 has seen a number of smaller companies-focused fund perform strongly in 2017 and has been reflected in their contribution to the portfolio performance.

The Standard Life Investments UK Smaller Companies fund was another strong performer in the AFI Aggressive portfolio. The £1.3bn fund managed by FE Alpha Manager has generated a 20.12 per cent gain during the first part of the year.

Away from the UK, another top performer in the portfolio was the £677m, four crown-rated fund Schroder Asian Alpha Plus fund, managed by Michael Dobbs. The fund rose by 20.54 per cent over the period compared with a return of 13.61 per cent for the average IA Asia Pacific ex Japan fund.


AFI Balanced

The two best performing funds in the AFI Balanced portfolio have already been mentioned above: Schroder Asian Alpha Plus and Standard Life Investments UK Smaller Companies.

However, there were a number of other strong performers helping to contribute to the portfolio’s 7.13 per cent gain for the year-to-date.

The £1.3bn smaller companies-focused Marlborough Special Situations fund was one of the portfolio’s best performers. The four-crown rated fund, which is co-managed by FE Alpha Manager Giles Hargreave and Eustace Santa Barabar, has returned 18.87 per cent in 2017, so far.

Performance of funds YTD

 

Source: FE Analytics

Another Old Mutual fund with top performance was the £2.9bn five crown-rated Old Mutual UK Mid Cap fund, managed by FE Alpha Manager Richard Watts.

The fund returned 18.57 per cent and is a top quartile performer in the IA UK All Companies sector, where the fund currently resides.

Investing further afield is the Hermes Asia ex Japan Equity fund, which has returned 18.28 per cent year-to-date. The $3.1bn five crown-rated fund is overseen by FE Alpha Manager Jonathan Pines and invests companies operating in emerging countries from the region. The fund is overweight China and Korea while heavily underweight India, Hong Kong.

Another regional play in the portfolio was the BlackRock European Dynamic fund. The £2.4bn five crown-rated fund is managed by FE Alpha Manager Alister Hibbert and invests in companies listed or incorporated in Europe but not the UK. During the first five months of the year the fund has risen by 17.78 per cent compared with an average return of 14.12 per cent for the average IA Europe ex UK fund.


AFI Cautious

Returns for the AFI Cautious portfolio were lower than the other two portfolios, reflecting its more conservative nature. However, there were still a number of funds delivering top performance during the first five months of the year.

As weighted portfolios, several funds in the more adventurous portfolios also feature AFI Cautious portfolio.

The £941.1m five crown-rated Jupiter India fund – which also featured in the other two portfolios –helped boost performance at the start of the year. The fund, managed by FE Alpha Manager Avinash Vazirani was up by 17.47 per cent.

Also featuring in the portfolio was the Threadneedle European Select fund, which was up by 16.44 per cent. The £3bn four crown-rated fund co-managed by FE Alpha Manager David Dudding and Mark Nichols rose by 16.44 per cent over the first five months.

The Baillie Gifford Japanese Smaller Companies fund was also one of the portfolios top contributors to performance. Co-managed by Praveen Kumar and Felicia Hjertman, the fund rose by 16.34 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.