Premier Diversified Growth, Vanguard LifeStrategy 60% Equity and MI Hawksmoor Distribution are the three balanced multi-asset funds that have topped their sector for a range of risk and reward measures, FE Trustnet research shows. 
As part of our annual series, we are reviewing the various Investment Association peer groups for funds’ cumulative five-year returns up to the end of 2018, the individual returns of 2018, 2017 and 2016, annualised volatility, alpha generation, Sharpe ratio, maximum drawdown, and upside and downside capture relative to the sector average.
We then assess each sector’s members on their average decile rankings for the 10 metrics above and this week it is the turn of the IA Mixed Investment 40-85% Shares sector, which was formerly known as the ‘balanced’ multi-asset sector.
Performance of fund vs sector and index over 5yrs to end of 2018
Source: FE Analytics
In first place in this research is Neil Birrell’s £172m Premier Diversified Growth fund, with its average decile ranking of 2.2 and five-year return of 44.68 per cent. It is in the sector’s top decile for five-year performance, alpha and Sharpe ratio.
The fund, which holds five FE Crowns for superior performance when it comes to stockpicking, consistency and risk control in recent years, aims for long-term capital growth with lower volatility than UK equities.
Birrell is the chief investment officer of Premier Asset Management and draws on the expertise in the firm’s fixed income, equity, property and absolute return investment teams when making asset allocation and investment decisions for the portfolio.
Premier Diversified Growth’s biggest exposures at present are to UK equities (23 per cent), North American equities (21 per cent), alternative fixed income (10.4 per cent) and hedge funds (10 per cent). Major individual holdings include BH Macro, the Highbridge Multi-Strategy fund and equities such as Diversified Gas & Oil, Spirent Communications and Legal & General.
In second place with an average decile score of 2.3 and a five-year total return of 39.63 per cent is Vanguard LifeStrategy 60% Equity.
This is part of a range of multi-asset funds that are built from individual Vanguard index trackers and have been very popular since launch thanks to their easy-to-understand approach, low fees and strong returns.
Although it is a passive offering, our research shows Vanguard LifeStrategy 60% Equity has been in the IA Mixed Investment 40-85% Shares sector’s top decile for five-year returns, alpha, volatility, maximum drawdown, Sharpe ratio and downside capture over the period examined.
Source: FE Analytics
MI Hawksmoor Distribution is in third place; it also has an average decile ranking of 2.3 but its five-year return is slightly lower than the Vanguard fund at 38.87 per cent. That said, it is also in the peer group’s first decile for five-year performance, alpha, volatility, maximum drawdown, Sharpe ratio and downside capture.
Managed by the FE Alpha Manager duo of Daniel Lockyer and Ben Conway, the £165.9m fund aims to deliver an attractive level of income through a portfolio of both open- and closed-ended funds.
The approach used by the team focuses on finding a margin of safety, which often leads the managers to asset that are trading at a discount. At the moment, MI Hawksmoor Distribution’s largest holdings include Man GLG UK Income, Schroder Income Maximiser and Phoenix Spree Deutschland.
But how have the largest funds in the IA Mixed Investment 40-85% Shares sector performed in this research? The largest member is Vanguard LifeStrategy 60% Equity with assets under management of £5bn and, as we have seen, it came in second place.
Baillie Gifford Managed, which is £3.7bn in size and is run Steven Hay and Iain McCombie, is the second largest in the sector. It has an average decile ranking of 3.7, which ranks it 22nd out of 121 funds.
The £2.9bn Quilter Investors Cirilium Moderate Portfolio fund is 37th with a 4.5 average decile ranking, the £2.4bn Vanguard LifeStrategy 80% Equity fund is fifth with a 2.5 score while the £2.1bn Newton Multi-Asset Balanced fund is 48th with a 4.9 average decile ranking.
Source: FE Analytics
Bringing up the bottom of the table is the Carvetian Fenix Balanced fund, which has an average decile ranking of 9.8. The fund is in the peer group’s bottom decile for every one of the 10 metrics we examined apart from upside capture (where it’s in the eighth decile).
City Financial Multi Asset Growth also has a bottom decile rank in nine of the 10 measures, along with a sixth decile ranking for downside capture.
During 2019, City Financial Investment Company has entered administration with this fund and five others transferred to Valu-Trac Investment Management and investment management responsibilities given to Garraway Capital.