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Adviser Fund Index

Of the three Adviser Fund Index sub-indices, AFI cautious should perform with the least volatility. Asset allocation shifts tend to occur gradually and so it proved in May, when the AFI panellists trimmed their fixed income and overseas equity weightings by two percentage points. European equities fell by one percentage point while British and American equities and property rose by the same amount.

AFI cautious marginally outperformed its more aggressive stablemates in season 12, with a total return of 3.4 per cent between May and November. However, it fell about halfway between its competitors, trailing the Association of Private Client Investment Managers and Stockbrokers income portfolio and beating the Investment Management Association cautious managed sector.

Looking at the five most popular funds from May, performance in season 12 was mixed. Artemis income was the star performer in absolute terms, with a return of 5.5 per cent according to Financial Express, but its second-quartile figures were eclipsed in relative terms by Newton global higher income. The Newton portfolio generated 3.2 per cent, taking it into the first quartile of the IMA’s global growth peer group.

The two most popular bond funds, L&G dynamic bond and M&G optimal income, both produced third-quartile numbers in the sterling strategic bond sector, with returns of 4 per cent and 4.7 per cent respectively. The worst performer in absolute and relative terms was M&G property portfolio. The £1.7bn fund, which was selected by five advisers in May, gained 1.7 per cent during the period against an IMA peer group average of 4.9 per cent.

Whitechurch Securities head of research Ben Willis, who is an AFI panellist, held M&G property portfolio in his cautious selection between May and November. While the fund did not “shoot the lights out” in performance terms during the period, Willis says it worked well as a diversifier for his equity and bond exposure.

Two of Willis’ strongest performers in season 12 were funds listed in the IMA sterling strategic bond peer group, Jupiter strategic bond and Invesco Perpetual monthly income plus. The £300m Jupiter portfolio, managed by Ariel Bezalel, produced a third-quartile return of 4.2 per cent while the £3bn monthly income plus fund achieved a gain of 5.1 per cent – enough to take it into the second quartile.

At the other end of the scale, Willis was disappointed with Cazenove UK absolute target. The fund took in a reported £60m when it was launched in July 2008, including money from Whitechurch. However, it has struggled this year, falling by 5 per cent between May and November. Willis says its explicit 8-10 per cent annual target return has become an “albatross around the neck” of its manager.

Data supplied by Financial Express


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