With combined assets under management (AUM) of almost £9bn and three FE Alpha Managers at the helm, Jupiter Merlin is without doubt the stand-out fund of funds range in the IMA universe.
Jupiter Merlin Income, Balanced, Growth and Worldwide have dominated their respective sectors for well over a decade, and the Conservative Portfolio has made a decent impression since being launched late last year.
The trio of John Chatfeild-Roberts, Peter Lawery and Algy Smith-Maxwell have inevitably attracted mass inflows, with the five-crown rated Jupiter Merlin Income taking the lion’s share.
However, a number of industry experts have recently warned of the dangers of investing in the darlings of the industry, which sometimes find it difficult to replicate performance following mass inflows.
Admittedly, size is less of an issue for fund of funds managers, who can move in and out of open-ended portfolios with relative ease, unlike their stockpicking counterparts.
That said, mass inflows can still impact a fund of funds’ flexibility, meaning that the manager may be forced to cut their exposure to smaller specialist portfolios in favour of larger ones.
For anyone who is worried about the volume – and speed – of inflows into these vehicles, or are just interested in looking at some alternative options, FE Alpha Manager Toby Rickett’s fund of funds range at Margetts is well worth a look.
Ricketts (pictured) is one of the few fund of funds managers who covers as wide an area as Chatfeild-Roberts & co, running portfolios with an income focus, growth focus, global focus, and multi-asset focus across the IMA Mixed Investment sectors.
He has a very high conviction-style, holding up to 80 per cent of assets in the top-10 holdings of his funds. He believes holding too many portfolios dampens his ability to add Alpha, and so instead backs his convictions.
Judging by his track record, which goes all the way back to 1992, he’s been right to put his money where his mouth is.
Like the Jupiter trio, Ricketts has been an FE Alpha Manager every year since the rating started back in 2009, thanks to his strong risk-adjusted record versus his peer group in both rising and falling markets.
Indeed, his record isn’t just strong in relation to his peers; he has upstaged his much higher-profile Jupiter rivals in some cases.
Performance of funds and sectors
| Name | 1yr (%) | 3yr (%) | 5yr (%) | 10yr (%) |
|---|---|---|---|---|
| Margetts Venture Strategy | 14.51 | 24.72 | 53.34 | 260.76 |
| Jupiter Merlin Growth Portfolio | 13.97 | 25.76 | 47.48 | 228.18 |
| IMA Flexible Investment | 12.4 | 18.59 | 24.29 | 128.76 |
| Jupiter Merlin Income | 15.09 | 27.25 | 46.65 | 144.71 |
| Margetts Opes Income | 15.29 | 27.66 | 38.02 | 143.11 |
| IMA Mixed Investment 20%-60% | 10.36 | 17.32 | 24.32 | 86.13 |
| Jupiter Merlin Balanced | 15.99 | 25.68 | 44.65 | 179.18 |
| Margetts Select Strategy | 15.25 | 23.97 | 36.4 | 172.59 |
| IMA Mixed Investment 40%-85% | 12.84 | 20.16 | 26.91 | 119.79 |
| Jupiter Merlin Worldwide Portfolio | 12.88 | 23.03 | 44.55 | 206.08 |
| Margetts International Strategy | 13.95 | 20.94 | 40.24 | 174.76 |
| Margetts Opes Growth | 19 | 25.42 | 27.53 | 161.39 |
| IMA Global | 14.35 | 20.62 | 30.6 | 136.7 |
Source: FE Analytics
The stand-out performer of Ricketts' range is arguably the Margetts Venture Strategy portfolio, which is a top quartile performer in its IMA Flexible Investment sector over a one, three, five and 10 year period.
The £79.4m fund has beaten its much larger rival Jupiter Merlin Growth Portfolio in three of the four time frames, only falling short over three years.
Over 10 years Venture Strategy is number one in its sector with returns of 260.76 per cent – more than twice as much as its sector average.
Performance of funds versus sector over 10yrs
Source: FE Analytics
The Jupiter and Margetts funds have around the same volatility, but Venture Strategy has a significantly lower max drawdown – 17.6 compared to 21.7 per cent, according to FE Analytics.
Ricketts’ fund holds 65 per cent of its assets in the top 10 holdings, making it significantly more concentrated than Jupiter Merlin Growth Portfolio. The fund is packed full of industry favourites, including Newton Asian Income, Aberdeen Emerging Markets and BlackRock European Dynamic.
It has a big overweight in emerging markets, which have a 67 per cent weighting overall.
As with all of his funds, Ricketts has run Venture Strategy since launch, in this case since 1995. It has a minimum investment of £1,000 and an ongoing charges fee (OCF) of 2.66 per cent, making it a touch more expensive than Jupiter Merlin Growth Portfolio.
Jupiter Merlin’s flagship product is its income fund, which has beaten its IMA Mixed Investment 20-60% sector average over 12 consecutive calendar years.
Ricketts’ Margetts Opes Income fund sits in a different IMA sector, and tends to have more invested in equities. However, they both target a yield close to that of the FTSE All Share, as well as modest capital growth on top.
There’s very little to separate the two portfolios over the short, medium and long-term. Jupiter Merlin Income has the better record over five and 10 years, while Ricketts just edges it over one and three.
Performance of funds over 5yrs
Source: FE Analytics
In terms of AUM though, there’s one clear winner; Margetts Opes Income is just £8m in size, while Jupiter Merlin Income has £4.5bn under management. Going forward, this means that Ricketts has significantly more flexibility to hold big positions in smaller vehicles.
The Opes fund is even more concentrated than Venture Strategy, with 75 per cent of assets in the top 10. It has 30 per cent split between the five-crown rated Newton Asian Income and Trojan Income funds. However, he also has large weightings to much smaller portfolios, including John McClure's £130m Unicorn UK Income fund, and the £174m Somerset Emerging Markets Dividend Growth fund.
The £94m Margetts Select Strategy fund also gives Jupiter Merlin Balanced a run for its money over the four time periods.
Margetts Select Growth has had a very good three years relative to both its IMA Global sector average and its Jupiter Merlin Worldwide Portfolio, earning it a maximum five-crown rating. However, its record is less strong over the longer-term.
Ricketts’ International Strategy fund also sits in the IMA Global sector. It’s consistently beaten its peer group, but has failed to break into the top quartile over any of the time frames.
Margetts Providence Strategy completes the range. It sits in the IMA Mixed Investment 20-60% sector, targeting capital growth and a growing level of income. The yield is currently at 2.9 per cent.
The fund is top quartile over a one, three and five year period, but is only second quartile over 10 years, thanks to a poor period between 2003 and 2005.
Ricketts has headed it up since 1995. It has an OCF of 2.27 per cent, and is again available for a minimum investment of £1,000.
Ricketts is currently bullish on a three-year view, and overweight equities throughout the range of funds, relative to their average.
If you have any questions for Toby Ricketts please leave them in the comments section below or email editorial@trustnet.com