Multi-asset managers Mike Fox, Eugene Philalithis and Simon Nichols have all made top quartile returns early on having taken over management of their respective funds within the last five years, according to FE Trustnet research.
Manager changes can be tricky for investors to navigate, particularly in the multi-asset space where the large range of investment opportunities can lead to different approaches to portfolio construction
Some fund managers leave their firm, some retire and others are merged away: a new manager’s first few years are important in proving they are capable of taking the reins.
Having previously considered the IA UK All Companies and IA Global sectors, FE Trustnet has picked out three managers from the IA Mixed Investment sectors who have made a strong start with their new mandates.
Royal London Sustainable Diversified Trust
The first fund under review is the five crown-rated Royal London Sustainable Diversified Trust run by FE Alpha Manager Mike Fox, who took over the fund in February 2014, replacing manager and head of external funds Linda Desforges.
Desforges resigned unexpectedly, as part of a trio of managers that left the firm following the integration of the asset management arm of the Co-operative Group which it bought in July 2013.
During her time as manager, the fund returned 60.19 per cent, placing it in the top quartile of the IA Mixed Investment 20-60% Shares sector.
Since Fox took over, the £424m fund has been the third best performer in the sector, returning 41.26 per cent, as the below chart shows, beating the sector average by 16.71 percentage points.
Performance of fund vs sector since manager start date
Source: FE Analytics
Over the past three years the fund improves to the second-best performer in the sector returning 35.25 per cent.
The fund uses a range of equity classes and is currently towards the upper limit of its equity allowance (60 per cent) with around 40 per cent fixed interest and cash.
The fund is mainly invested in UK assets, with close to two-thirds of the portfolio split between UK corporate fixed interest and UK equities, though its top three holdings are US-based Amazon.com, Microsoft Group and Alphabet.
It has a yield of 1.91 per cent and a clean ongoing charges figure (OCF) of 0.77 per cent.
Next up is the four crown-rated Fidelity Multi Asset Income fund run by Eugene Philalithis, who took over the fund in May 2013. Richard Skelt had previously managed the fund since its launch in 2007 before retiring from Fidelity after 23 years at the firm.
Skelt, who founded the multi-asset team at Fidelity, ran a number of funds including the Fidelity Wealthbuilder and Moneybuilder Global funds, which were later taken over by James Bateman.
During his tenure, the Fidelity Multi Asset Income fund, which sits in the IA Mixed Investment 0%-35% Shares sector, returned 36.2 per cent, putting it in the second quartile of the sector.
Under Philalithis – who was later joined by Nick Peters – the fund has been a top quartile performer, returning 27.45 per cent, as the below shows.
Performance of fund vs sector since manager start date
Source: FE Analytics
The £458m fund is a predominantly fettered funds of funds offering, with Fidelity Enhanced Income, Moneybuilder Income and Extra Income funds as the top three holdings. However it also holds the HICL Infrastructure Company as well.
The fund is currently 25.7 per cent invested in investment grade bonds, 23.7 per cent in high yield bonds and 14.2 per cent weighted to global equities – its top three positions.
In its latest factsheet, Square Mile Research noted: “The fund has been designed and is managed by an impressive team which operate independently from the rest of Fidelity Worldwide Investment, but who are able to leverage off of the wider resources within the group.
“The strong framework, which the Fidelity Solutions Team has specifically designed to ensure the fund meets its objective, is married with the managers' ability to exercise discretion on asset allocation and investment selection.
“The experienced lead manager has demonstrated he is able to successfully deliver the objective whilst being mindful of the overall level of risk he is exposing investors to.”
The fund has a yield of 2.82 per cent and an OCF of 1.13 per cent.
The final fund in the study is the four crown-rated Newton Global Balanced run by Simon Nichols, who took over from Iain Stewart in February 2013.
Nichols took over after 11 years at the firm and his ascension to the fund was described by the firm as “natural career progression”.
Stewart remains at the firm and runs the Newton Real Return and Newton Multi-Asset Balanced funds. During Stewart’s tenure, the fund, which sits in the most equity-heavy IA Mixed Investment 40-85% Shares sector, was the fourth best performer in the sector.
It returned 135.03 per cent during the manager’s 13 years at the helm, and Nichols has continued this strong performance.
Indeed, since he took over the fund is still in the top quartile of the sector, having returned 50.49 per cent.
Performance of fund vs sector since manager start date
Source: FE Analytics
The £647m fund is 75.44 per cent weighted to equities with 35.74 per cent in the UK and 23.63 per cent in North American equities.
It has 14.17 per cent in bonds with 8.38 per cent held in cash.
In its latest factsheet, Nichols wrote: “While equity markets have enjoyed significant momentum since Donald Trump’s election victory in November, there remains much to be highly cautious about.
“The world continues to contend with some profound challenges; demographics, technology change and ever-present debt burdens may now be added by the discrediting of globalisation and threats to the free trade on which much prosperity has been built.”
He added: “Uncertainty is the enemy of financial markets and this is likely to remain the case as they react to Donald Trump’s actions and the process of negotiating the UK’s exit from the EU continues.
“The portfolio is therefore positioned for a challenging period of low economic growth and more volatile returns.”
The fund has a yield of 1.8 per cent and a clean OCF of 0.5 per cent.