Multi-asset sectors are dominated by multi-billion pound funds such as Standard Life GARS and the Jupiter Merlin range, which time and time again top the sales charts.
The wider universe of multi-asset funds means they are less susceptible to soft-closures than more focused portfolios, but worries over their flexibility still remain. Every fund has a tipping point, after all.
With this in mind, FE Trustnet asks the experts to identify some up-and-coming stars in the sector that have no worries about capacity.
Insight Absolute Insight
"The blockbuster product has been Standard Life GARS, so for investors wanting to find a smaller, less well-known contender, we would highlight Insight Absolute Insight," said Jason Hollands (pictured), head of business and communications at Bestinvest.
"It is a fettered fund of absolute return funds that aims to deliver returns of cash plus 4 per cent over the cycle and a positive return over any 12-month period. The fund is spread across uncorrelated absolute strategies that include currency, emerging market debt, credit and equities."Hollands points to the fact that the fund has surpassed its objectives since its launch back in February 2008 – our data shows it has delivered a positive return over every calendar year, with the exception of 2008 when it lost just 0.17 per cent.
Year-on-year performance of fund vs sector 2008-2012
| Name | 2012 returns (%) |
2011 returns (%) | 2010 returns (%) | 2009 returns (%) | 2008 returns (%) |
|---|---|---|---|---|---|
| Insight Absolute Insight | 6.42 | 0.24 | 8.97 | 10.51 | -0.17 |
| IMA Targeted Absolute Return | 3.41 | -1.26 | 4.32 | 8.61 | -3.6 |
Source: FE Analytics
On a cumulative basis, the fund has delivered 32.84 per cent since its launch, compared with 19.32 per cent from the IMA Absolute Return sector and 15.51 per cent from the Libor GBP 3m benchmark.
Incidentally, the fund has underperformed the Standard Life GARS fund since the latter’s launch in 2008, but as the graph below shows, it has been significantly less volatile.
Performance of funds since May 2008
Source: FE Analytics
Insight Absolute Insight is headed up by Reza Vishkai and Sonja Uys, who are both FE Alpha Managers.
The fund holds five other Insight portfolios, including Insight Absolute UK Equity Market Neutral and Insight Absolute Currency.
It requires a minimum investment of £5,000 and has an ongoing charges figure (OCF) of 1.32 per cent. However, it charges a performance fee on top of that.
Newton Managed Income
Newton is one of the most respected multi-asset houses around, with multi-billion pound funds such as Newton Real Return and Newton Balanced among the largest in the sector.
FE Alpha Manager Tim Wilson’s Newton Managed Income fund has only just reached its five-year anniversary and is only £112m in size; however, given the portfolio’s track record so far and the calibre and marketing power of Newton, it is certainly one to watch for the future.
It sits in the IMA Mixed Investment 20%-60% Shares sector, targeting both growth and income by investing in other funds run by Newton. Among its largest holdings are Newton Global Higher Income and Newton Asian Income.
So far the fund has performed very well. It has beaten its sector average – which is also its benchmark – since launch, with returns of 48.9 per cent, and has also delivered a competitive, growing income. At the time of writing, the fund is yielding 4.49 per cent.
Performance of fund vs sector since launch
Source: FE Analytics
The members of Rob Gleeson’s FE Research team are big fans of Wilson, and include the fund in the FE Select 100 ahead of much larger rivals.
While some investors are wary of fettered funds of funds because they do not have the flexibility to invest across the industry, the team believe Wilson already has enough tools at his disposal.
They say the priority Wilson puts on dividend growth is likely to go down well with retail investors and advisers.
"Wilson is focused on his clients’ needs," the team said. "He cares about their expectations and understands how they use this fund; as a result, providing a stable – and, if possible, growing – level of income is his priority."
"Wilson is relatively unconcerned if capital appreciation is not fantastic, because income is what really matters; however, the fund has delivered superior capital growth as well."
"Wilson takes an absolute return approach to several other accounts he manages for private investors, meaning he is sensitive to downside risk."
"He does not need to look for external funds, because the Newton range is complete. Also, being Newton’s strategist gives him the advantage of choosing funds that already follow the desired strategy."
Newton Managed Income requires a minimum investment of £1,000 and has an OCF of 1.4 per cent, making it one of the cheapest funds of funds on the market. It has five FE Crowns.
Fidelity Moneybuilder Balanced
Similar to Newton, Fidelity has a major presence in the multi-asset market and has a marketing budget to match.
The £300m vehicle invests in equities and bonds, typically with a 2:1 split between the two asset classes. The equity portion tends to be in dividend-paying UK large caps, while the bond portion is in high-quality debt such as gilts and investment-grade corporates.
Advisers have typically liked this rigid, predictable approach to investing, as seen by the recent surge of inflows in to the likes of Jupiter Distribution and Cazenove Multi Manager Diversity.
Fidelity Moneybuilder Balanced has not enjoyed the same kind of inflows, although it has grown by around 25 per cent – or £50m – in the last year, which could be a sign of things to come.
FE Alpha Manager Ian Spreadbury has run the fixed interest portion of the portfolio since 1995, and he was joined by the highly rated Michael Clark (pictured) in December 2009.
Since then, it has delivered steady outperformance relative to its sector and composite benchmark – split 65/35 between the FTSE All Share and FTSE Government All Stocks index.
Performance of fund vs sector and benchmark since Dec 2009
Source: FE Analytics
The five crown-rated fund has also been significantly less volatile than both the sector and index, and has a competitive yield of 4.1 per cent.
The members of the FE Reseach team rate the fund, and see it as one of the few that suits an investor with a short- to medium-term time horizon.
"Compared with other funds that aim to provide a regular earnings stream – whether that is through investing in equities, debt or both – the high level of income that Fidelity Moneybuilder Balanced pays out makes it an above-average performer," the team said.
"The fund is a combination of Fidelity’s best investment ideas in the UK, both in terms of equities and UK corporate and government debt. It is similar to the Fidelity Moneybuilder Dividend fund, but it pays out a lower level of income and its valuation fluctuates less."
"It is a good alternative for investors who want to commit their money for a shorter period of time."
Fidelity Moneybuilder Balanced requires a minimum investment of £500 and has an OCF of 1.21 per cent.
