Newton Real Return
With a total expense ratio (TER) of 1.12 per cent, FE Alpha Manager Iain Stewart’s £5bn portfolio is one of the cheapest in IMA Absolute Return. The average fund in the sector has a TER of 1.88 per cent, while the most expensive – RCW Europe Absolute Alpha – charges a massive 5.75 per cent.
While these charges have certainly done no harm to Newton Real Return’s record, the fund would be a top-quartile performer even if it charged in excess of the average TER. According to FE data, the fund is among the top-three best-performing vehicles in its sector over three and five years, with returns of 25.95 and 46.56 per cent respectively.
Performance of fund vs sector over 5-yrs
| Name | 1 yr (%) | 3 yrs (%) | 5 yrs (%) |
| Newton Real Return | 1.69 | 25.95 | 46.56 |
| IMA Absolute Return | -1.17 | 13.02 | 14.05 |
Source: FE Analytics
Unlike many of his peers, Stewart has also managed to break even over a one-year period, despite the high levels of volatility. The fund has also managed to deliver an absolute return during every calendar year since its inception in 2004.
A minimum investment of £20,000 means the fund is only suitable for high-end retail investors, though it is also available at a lower entry point via certain platforms.
Troy Spectrum
Multi-manager portfolios are an attractive prospect for investors who want a high level of diversity. However, since these funds have an extra layer of charges, their TER often exceeds 2 or even 2.5 per cent.
Enter Troy Spectrum, which offers a minimum investment of £1,000, at a rate of just 1.47 per cent. Managed by FE Alpha Managers Sebastian Lyon and Francis Brooke, the fund has returned 35.14 per cent since it was launched in March 2008, compared with 3.92 per cent from the average Active Managed fund.
Only CF Ruffer Equity & General has done better during this time. Despite the fact it is a single-manager fund, it is actually more expensive than Troy Spectrum, with a TER of 1.54 per cent.
First State Global Property Securities
While the majority of retail funds in the IMA Property sector charge investors in excess of 2 per cent, Andrew Nicholas’ First State Global Property Securities portfolio is one of the more reasonably priced on the market, charging 1.49 per cent, with a minimum investment of £1,000.
Performance of fund vs sector over 5-yrs
Source: FE Analytics
As well as being one of the cheapest, it is the best-performing vehicle of its kind over three and five years, with returns of 79.19 and 8.03 per cent respectively. The average Property fund has lost investors 25.23 per cent over five years.
It is a top-five performer over a one-year period as well.
Thesis Australian Natural Resources
Myles Campion’s £22m Thesis Australian Natural Resources fund may not be as large or well established as competitors such as JPM Natural Resources, but it has an excellent record over recent years.
The vehicle had a torrid time during the financial crisis, but has recovered impressively since, returning 146.54 per cent over a three-year period. This compares with 125.4 per cent from JPM Natural Resources, 94.2 per cent from First State Global Resources and 49.13 per cent from Investec Enhanced Natural Resources.
This investment is not for the faint-hearted, however; it is more volatile than the vast majority of natural resources funds, and tends to underperform in down markets.
As well as being the best-performing natural resources fund of the last three years, it is also the cheapest. According to FE data, it has a TER of 1.4 per cent, which is significantly lower than the vast majority of its peers. The second cheapest – First State Global Resources – has a TER of 1.6 per cent.
Trojan Income
Another fund under the management of Troy Asset Management, this sector-leading portfolio offers its services for a TER of just 1.06 per cent. Trojan Income is the sixth-cheapest fund in the entire UK Equity Income sector, and the only one of those six that is suitable for retail clients.
According to FE data, Francis Brooke’s vehicle tops its sector over a five-year period, with returns of 29.3 per cent. While it underperformed its peers and FTSE All Share benchmark during the 2009 and 2010 QE-fuelled rally, it has been much more effective at protecting against the downside.
The £428m portfolio has a minimum investment of £1,000.