Newton Multi-Asset Growth, TB Wise Income and Premier Multi-Asset Global Growth are examples of IA Flexible Investment funds that have consistently posted the best numbers on a range of performance and risk metrics in recent years, the latest research by FE Trustnet shows.
As part of an ongoing series, we are looking at the average decile rankings of funds for their cumulative five-year returns to the end of 2016, those for the three most recent individual calendar years, annualised volatility, maximum drawdown, alpha generation, Sharpe ratio, downside capture and upside capture.
Performance of sector and index over 5yrs to 31 Dec 2016
Source: FE Analytics
We now turn our attention to the four multi-asset peer groups and first up is the IA Flexible Investment sector. Although there are many different benchmarks in play in the sector, this research has examined the performance of funds relative to the FTSE UK Private Investor Global Growth index.
Over the following pages, we look more closely at the five funds with the highest average decile rankings for the 10 metrics mentioned above before revealing the 25 members sitting at the very top of the peer group on the final page.
Newton Multi-Asset Growth
Performance of fund vs sector and index over 5yrs to 31 Dec 2016
Source: FE Analytics
With an average decile ranking of 2.9 and a five-year total return of 84.09 per cent, Newton Multi-Asset Growth is the fund kicking off our list in fifth place. The £1.7bn fund, which is headed up by FE Alpha Manager Christopher Metcalfe, sits in the sector’s top decile for five-year returns and maximum drawdown; it’s second decile for alpha generation, Sharpe ration and upside capture. Like all Newton funds it is built around the company’s global thematic investment approach, which looks at how overarching economic and market themes drive investment opportunities and risks. The portfolio has a structural bias towards the UK, with names such as RELX, Diageo and National Express Group contributing to its 38.2 per cent allocation to home shores. It has close to 30 per cent of its portfolio in North American stocks and 13 per cent in Europe while technology, consumer services and financials are the biggest industrial allocations. Newton Multi-Asset Growth has a 0.67 per cent ongoing charges figure (OCF).
TB Wise Income
Performance of fund vs sector and index over 5yrs to 31 Dec 2016
Source: FE Analytics
Next up is the £87.4m TB Wise Income fund, which is managed by Tony Yarrow and has an average decile ranking of 2.9. The fund is in the IA Flexible Investment peer group’s top decile for its 99.28 per cent five-year total return as well as for alpha generation, Sharpe ratio and downside capture. Yarrow manages the portfolio to produce an attractive income stream, while aiming for income and capital growth that it is line with inflation or better. When it comes to income, an initial investment of £10,000 would have paid out £3,223 over the past five years. This is another fund with a significant chunk of its portfolio held in UK equities, with 27.8 per cent in UK small-caps, 12.6 per cent in large-caps and 10.4 per cent in mid-caps. It also has around 5 per cent in cash but Yarrow’s latest update added: “We are still finding plenty of value opportunities in our investable universe and expect to reduce cash in the near future.” TB Wise Income has a 0.99 per cent OCF and is yielding 4.50 per cent.
COURTIERS Total Return Growth
Performance of fund vs sector and index over 5yrs to 31 Dec 2016
Source: FE Analytics
In third place is COURTIERS Total Return Growth, thanks to its five-year return of 89.99 per cent and an average decile ranking of 2.7. The £68m fund is managed by Caroline Shaw and Gary Reynolds. It is in the IA Flexible Investment sector’s top decile for five-year total return and Sharpe ratio, while being in the second decile for alpha generation and upside capture. It aims for a combination of income and capital growth within an above-average risk profile. Because of this, the firm says it is appropriate for investors with investment horizons of at least five to 10 years. Some 85 per cent of the portfolio is currently in equities funds with the likes of Schroder QEP Global Core Equity, Aberforth Smaller Companies and Edinburgh Dragon being among its top 10 holdings. COURTIERS Total Return Growth has an OCF of 1.76 per cent.
Premier Multi-Asset Global Growth
Performance of fund vs sector and index over 5yrs to 31 Dec 2016
Source: FE Analytics
In second place is Premier Multi-Asset Global Growth, which is managed by David Hambidge, Simon Evan-Cook, Ian Rees and David Thornton. The £131m fund scores an average decile ranking of 2.7 and is top quartile for its 95.56 per cent five-year return, alpha generation, Sharpe ratio and upside capture. This is the highest risk strategy managed by Premier’s multi-asset team and the funds in the range have built up strong long-term track records on the back of a contrarian approach that has a keen focus on valuations. Square Mile, which gives the fund an ‘A’ rating, said: “We have a high regard for this focused and stable team that is led by the experienced David Hambidge. They have an excellent appreciation of the outcomes that investors seek and this diversified, primarily equity, portfolio has generated performance that has met its objectives since the team took responsibility for the fund in 2012.” Premier Multi-Asset Global Growth has a 1.91 per cent OCF.
Unicorn Mastertrust
Performance of fund vs sector and index over 5yrs to 31 Dec 2016
Source: FE Analytics
Coming in first place in our study with a 2.4 average decile ranking and a 99.54 per cent total return over the five years to the end of 2016 is Unicorn Mastertrust. Headed up by FE Alpha Manager Peter Walls, this £49m fund sits in the peer group’s first decile for five-year returns, alpha generation, maximum drawdown, Sharpe ratio and downside capture. The fund aims for long-term capital growth through a portfolio of investment trusts, with its top holdings including Standard Life Private Equity, Foreign & Colonial, Monks, Throgmorton and TR Property. However, the manager – who is a contrarian investor and only buys trusts trading on a discount to their net asset value – also has a cash weighting of just over 10 per cent. Unicorn Mastertrust has a 0.88 per cent OCF.
Source: FE Analytics