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The balanced multi-asset funds topping the tables on (just about) every metric

As we continue our in-depth review of multi-asset funds, FE Trustnet finds out how the IA Mixed Investment 40-85% Shares sector stacks up on a wide range of risk and return metrics.

Gary Jackson

By Gary Jackson, Editor, FE Trustnet
Tuesday June 13, 2017

Balanced multi-asset funds managed by the likes of Premier, Royal London Asset Management and COURTIERS are among those posting some of the sector’s best return and risk numbers over recent years, but it may surprise that they are joined by two passive portfolios at the top of the rankings.

As part of an ongoing series, we are looking at the main Investment Association sectors and examining their members’ average decile ranking for 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.

In this article, we put the IA Mixed Investment 40-85% Shares sector – which was formerly known as the ‘balanced’ sector – under the spotlight, using the FTSE UK Private Investor Balanced index for comparison.

Performance of sector and index over 5yrs to 31 Dec 2016

 

Source: FE Analytics

When we ran this research last year, the top five funds were Royal London Sustainable World Trust, Premier Multi-Asset Growth & Income, Henderson Inst Global Care Managed, Fidelity Moneybuilder Balanced and Consistent Practical Investment.

However, there have been some changes in the rankings for the updated figures to the end of 2016. In the following article, we take a look at the five funds scoring the best average decile rankings over the five years in question as well as revealing the top 25 on the final page.


Vanguard LifeStrategy 60% Equity

Performance of fund vs sector and index over 5yrs to 31 Dec 2016

 

 

Source: FE Analytics

In first place with an average decile ranking of 2.6, we have a multi-asset fund managed by passive investing giant Vanguard Asset Management. The £2.7bn Vanguard LifeStrategy 60% Equity fund made a fourth-decile 61.07 per cent total return over the five years to the end of 2016 but is in the top quartile for annualised volatility, maximum drawdown, Sharpe ratio and downside capture. This is a diversified portfolio of asset split – as its names suggests – approximately 60 per cent towards equities and 40 per cent towards fixed income. Its exposure is taken from underlying index tracker run by Vanguard. Vanguard LifeStrategy 60% Equity has an ongoing charges figure (OCF) of 0.22 per cent.


Vanguard LifeStrategy 80% Equity

Performance of fund vs sector and index over 5yrs to 31 Dec 2016

 

 

Source: FE Analytics

Vanguard LifeStrategy 80% Equity also has a 2.6 average decile ranking, according to our research, but comes in fourth place thanks to its first-decile five-year return of 76.15 per cent. It is also in the top 10 per cent of its peer group for Sharpe ratio and upside capture. The £1.3bn fund has the same approach as the previously mentioned Vanguard LifeStrategy offering, with the only difference being a higher weighting to equities. Vanguard LifeStrategy 80% Equity also has a 0.22 per cent OCF.


COURTIERS Total Return Balanced Risk

Performance of fund vs sector and index over 5yrs to 31 Dec 2016

 

 

Source: FE Analytics

Next up is Gary Reynolds and Caroline Shaw’s £191.5m COURTIERS Total Return Balanced Risk fund, which scored an average decile ranking of 2.6. The fund is in the top decile for Sharpe ratio and the second for five-year returns, alpha generation, annualised volatility, maximum drawdown and

downside capture. It aims for “an optimal total return” through a combination of capital growth and income and is deemed appropriate for investors willing to accept risk on a medium- to long-term time horizon. At the moment, the portfolio has 65 per cent of assets in equities, 20 per cent in cash and 8 per cent in bonds, with 7.5 per cent in ‘others’. COURTIERS Total Return Balanced Risk has a 1.82 per cent OCF.


Royal London Sustainable World Trust

Performance of fund vs sector and index over 5yrs to 31 Dec 2016

 

 

Source: FE Analytics

FE Alpha Manager Mike Fox’s Royal London Sustainable World Trust was the top fund in last year’s research but has slipped into second place this time around with a 2.4 average decile ranking. The £337.8m fund made 98.43 per cent over the five years examined here. It’s top decile for five-year returns, alpha generation, Sharpe ration and upside capture. However, its annualised volatility of 8.84 per cent puts it in the bottom decile for this metric. The portfolio is built around Royal London Asset Management’s sustainable investment approach, which focuses on key themes such as climate change and healthcare. It largest sector exposure is to technology at 19 per cent, followed by healthcare and industrials; top holdings include Amazon, Microsoft, Alphabet, Rentokil and Adidas. Royal London Sustainable World Trust has a 0.78 per cent OCF.


Premier Multi-Asset Growth & Income

Performance of fund vs sector and index over 5yrs to 31 Dec 2016

 

 

Source: FE Analytics

Heading up this year’s ranking is David Hambidge, Simon Evan-Cook, Ian Rees and David Thornton’s Premier Multi-Asset Growth & Income fund; this is a promotion from second place over the five years to the end of 2015. The £579.2m fund has an average decile ranking of 1.5 for the 10 measures examined and is in the IA Mixed Investment 40-85% Shares sector’s top decile for five-year returns, alpha generation, maximum drawdown, Sharpe ratio, upside capture and downside capture. Like all the multi-asset funds managed by Premier multi-asset team, it has a contrarian approach with a very keen eye on valuations. Top holdings include Polar Capital European (ex UK) Income, Polar Global Convertibles, Schroder Income, GLG Undervalued Assets and Charlemagne Emerging Market Dividend. Premier Multi-Asset Growth & Income has a 1.71 per cent OCF.


 

Source: FE Analytics


This article is for professional investors only. You will be redirected to the News & Research homepage in seconds. If you are having problems getting to the page, please click here
Data provided by FE. Care has been taken to ensure that the information is correct, but FE 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.

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