The five crown-rated Henderson Multi-Manager Diversified fund was the only one in the IMA Mixed Investment 0-35% Shares sector to deliver top-quartile performance in 2009, 2010 and 2011, while the £81m Newton Managed Income and five crown-rated T Bailey Discovery Balanced funds were the only consistent top-quartile performers in IMA Mixed Investment 20-60% Shares.
The five crown-rated Aberdeen Multi-Asset fund was the standalone outperformer in IMA Mixed Investment 40-85% Shares, while no funds in the equity-heavy IMA Flexible Investment sector managed the achievement.
Top-quartile funds over 3 discrete years
| Fund | 2009 returns (%) | 2010 returns (%) | 2011 returns (%) | IMA Sector |
| Henderson Multi-Manager Diversified | 30.81 | 10.53 | 3.73 | Mixed Investment 0-35% Shares |
| Newton Managed Income | 68.75 | 34.41 | 0.75 | Mixed Investment 20-60% Shares |
| T Bailey Discovery Balanced | 26.46 | 11.36 | 4.38 | Mixed Investment 20-60% Shares |
| Aberdeen Multi-Asset | 24.69 | 15.16 | 0.07 | Mixed Investment 40-85% Shares |
Source: FE Analytics
The £38.9m Henderson portfolio, which is in the FE Select 100 list of recommended funds, is on track to deliver top-quartile returns again this year, having made 8.82 per cent year-to-date, compared with a sector average of 4.83 per cent.
The fund, managed by Paul Craig and Bill McQuaker, is top-quartile over 10 years. However, it was hit hard by the financial crisis in 2008 and its returns of 1.65 per cent over five years leave it languishing in the bottom-quartile over this period, while the sector returned 14.94 per cent, according to FE Analytics.
Performance of fund vs sector over 10-yrs
Source: FE Analytics
Newton Managed Income, headed by FE Alpha Manager Tim Wilson, has also continued to deliver top-quartile returns year-to-date; however, T Bailey Discovery Balanced has moved into the second quartile since the start of 2012.
The Aberdeen Multi-Asset fund has fallen into the third quartile year-to-date, having returned 6.75 per cent since the start of 2012, compared with an IMA Mixed Investment 40-85% Shares sector average of 7.61 per cent.
Charles Younes, analyst at FE Research, says even these funds sustained heavy losses in 2008, with each one losing roughly a quarter of its value in the rapid market slide of September that year.
Speaking about the Henderson portfolio, Younes said: "The manager tends to take more risk than others. He has a huge exposure to specialist funds, like private equity. But there is a very low correlation to equity markets because of the allocation to specialist products."
He adds that the Newton management team is well known for its stock-picking ability, which has contributed to the stability of the fund.
He also stressed strong stock-picking ability was a common thread throughout the top-quartile portfolios: the T Bailey fund did well in 2011 due to its choice of UK stocks and the Aberdeen fund was helped by its allocation to Asia.
"It’s not surprising because they have a really great Asian equity team at Aberdeen," he said.
Chris Mayo, investment director at Wells Capital, says investors need to exercise caution, even in light of the diversification benefits offered by multi-asset funds, because there are so many different styles of management and allocation calls within the space.
"Part of it is down to what the objectives of the fund are and what they’re trying to deliver," he commented.
"In the 20-60% Shares sector, you can have one fund with 20 per cent equities and one fund with 60 per cent. It is such a varied space and there is such a difference in what they potentially might own within the sector."
"Investors need to ensure they’re investing in funds that can demonstrate a consistent long-term track record. Some managers are fund pickers and some make macro calls and you need to understand what you’re investing in."