Today's three-year rankings of multi-asset funds is little changed from where it stood six months ago despite the crash in February/March and the following rally in markets, Trustnet research has found.
The three-year track record has become increasingly important in recent years and is the average holding period for investors in open-ended funds, according to the Investment Association. Yet as styles and strategies come in and out of favour, and funds just celebrating their third anniversary enter the rankings, three-year leadership can change quite quickly.
Having previously looked at equity funds and bond strategies, Trustnet now ranks all the multi-asset funds in the IA universe (including the four main multi-asset sectors, IA Volatility Managed, IA UK Equity & Bond Income and IA Targeted Absolute Return sectors) by their three-year returns – as at 30 June 2020 – and compares them with how the rankings looked six months ago.
As the below table shows, multi-asset strategies with a greater exposure to equities have remained at the top of the table as stock markets recovered much of the losses of the coronavirus sell-off during the past few months.
Source: FE Analytics
While the top-10 remains little changed there has been some movement, with the £137.7m Liontrust Global Alpha fund emerging as the best performer over three years, rising from sixth place.
The five FE fundinfo Crown-rated fund – previously known as Neptune Global Alpha – is overseen by veteran investor Robin Geffen and has made a total return of 59.13 per cent over the past three years.
Liontrust Global Alpha targets capital gains over the long term (five years or more) and has a multi-asset remit, sitting in the IA Flexible sector. Nevertheless, some 89.5 per cent of the concentrated fund is currently invested in direct equities with 7.5 per cent held in funds drawn from the former Neptune stable, including a 4.4 per cent in the £81.8m Liontrust Global Technology fund Geffen also manages.
Indeed, the fund has a bias towards technology stocks – which have performed strongly in the growth-led bull run of recent years and have also benefited from the lockdown work from home trend – with 48.6 per cent of the portfolio held here.
Sister fund Liontrust Sustainable Future Managed Growth remained in second place in the three-year rankings with a total return of 58.84 per cent.
The £439.5m multi-asset fund overseen by Peter Michaelis and Simon Clements uses its proprietary Sustainable Future process to identify key structural growth trends shaping the global economy of the future, investing in well-run companies whose products and operations are able to capitalise on those trends.
One of the biggest risers in this study was the £26.8m FP Argonaut Absolute Return fund, run by FE fundinfo Alpha Manager Barry Norris, from the IA Targeted Absolute Return sector.
FP Argonaut Absolute Return fund came to investors’ attention earlier this year as it emerged as the best performing strategy in March making a 15 per cent total return when most other funds recorded losses.
Performance of fund vs sector over 3yrs
Source: FE Analytics
The long/short equity strategy has made 44.33 per cent over the past three years and has risen from 277th place in our study to fifth.
Other big movers in the top-25 were MFS Meridian Prudent Capital, Sarasin IE GlobalSar Dynamic USD, Sarasin IE GlobalSar Strategic USD, and Capital Group Global Allocation.
The $3.1bn MFS Meridian Prudent Capital overseen by Alpha Manager Barnaby Wiener, David Cole and Edward Dearing climbed from 156th place to 11th, with the multi-asset strategy making a total return of 30.91 per cent over the prior three years.
The five Crown-rated IA Flexible Investment strategy targets long-term returns but is able to reduce market exposure when the opportunities are not attractive. It made a total return of 11.45 per cent over the first six months of the year, although it lagged broader equity markets because of a high cash (US dollar) weighting.
However, a high US dollar weighting would have been a benefit for UK investors with sizeable exposures to the currency or hedged strategies, as sterling fell by 6.66 per cent against the dollar during the first half.