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Vanguard LifeStrategy and 7IM AAP top list of advisers’ most researched risk-targeted funds

31 March 2017

When finding out which risk-targeted funds have been most viewed by advisers using FE Analytics, passive ranges stand out.

By Gary Jackson,

Editor, FE Trustnet

Funds in the Vanguard LifeStrategy and 7IM AAP ranges dominate the list of risk-targeted solutions being researched by financial advisers in 2017, exclusive data reveals, showing how passives have made strong inroads into the multi-asset space.

Vanguard launched its LifeStrategy offering in the UK in 2011 and the range has become a popular option with professional investors since. LifeStrategy is a five-strong range of static-allocation portfolios built using Vanguard’s index funds and designed to offer a one-stop solution for investors.

The range has performed strongly and all five – Vanguard LifeStrategy 100% Equity, Vanguard LifeStrategy 80% Equity, Vanguard LifeStrategy 60% Equity, Vanguard LifeStrategy 40% Equity and Vanguard LifeStrategy 20% Equity – have beaten their respective Investment Association sector since launch in June 2011.

Performance of fund vs sector since launch

 

Source: FE Analytics

Indeed, four of the funds have turned in top quartile returns since inception, with the exception being Vanguard LifeStrategy 100% Equity whose 90.09 per cent total return only lands it a placed in the IA Global sector’s second quartile.

The highest return has come from the £1.1bn Vanguard LifeStrategy 80% Equity fund, which has beaten its average peer by close to 30 percentage points with a 79.24 per cent total return. This makes the fund the third best performer out of the 102 members of the IA Mixed Investment 40%-85% Shares sector.


However, as the table below shows (which reveals the 30 risk-targeted funds being researched on FE Analytics since the start of 2017), it is the LifeStrategy 60% Equity fund that has captured the most adviser interest this year.

 

Source: FE Analytics

As can clearly be seen, the five Vanguard LifeStrategy funds are all in the top 10 most researched products – including all three top spots.

As well have boasting strong total returns, the funds also have caught advisers’ eyes due to their low fees. At the start of this year, the ongoing charges applied to the funds were brought down to just 22 basis points, bringing the passive price war firmly into the passive space.


Of course, advisers are looking at more than just the Vanguard LifeStrategy funds when seeking risk-targeted solutions but a lot of attention has been directed towards passive offerings.

Four of the five funds in the 7IM AAP appear in the top 10: 7IM AAP Balanced, 7IM AAP Moderately Adventurous, 7IM AAP Adventurous and 7IM AAP Moderately Cautious.

All these funds invest predominantly in passive strategies. Unlike the LifeStrategy range, the underlying holdings are from external providers, resulting in ongoing charges of between 66 and 69 basis points.

Performance of fund vs sector since launch

 

Source: FE Analytics

As shown above, the highest return since inception in March 2008 has come from the £784.5m 7IM AAP Moderately Adventurous fund, which has made a 66.46 per cent total return.

While this puts the fund in the IA Mixed Investment 40%-85% Shares sector’s fourth quartile, it is close to the 5.1 per cent 10-year annualised gross return targeted by the fund.

In tenth place we have the only active fund to make into the top 10 - Standard Life Investments MyFolio Managed III, which is headed up by Bambos Hambi. This £2.8bn fund is mainly invested in other Standard Life Investments products.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.