Apollo Multi-Asset Management’s cautious and balanced funds of funds have outperformed their respective benchmarks at their third anniversary despite a difficult 2011.
The cautious fund beat its cash plus 3 per cent benchmark over three-years as at November 26, 2011, returning 18.97 per cent compared with the 11.25 per cent return from its benchmark. Over the same period, the balanced fund returned 24.2 per cent compared with a 17.85 per cent return from its cash plus 5 per cent benchmark.
The funds’ structured product holdings were hit hard last year because a spike in volatility had a negative impact on pricing. The investment trust sell-off also hurt the Apollo funds as share prices fell more sharply than the underlying asset values, creating high discounts. The multi-manager says it now holds both investment types on attractive terms, which should be beneficial over the long-term in rising or neutral markets.
Apollo also suffered last year from a lack of exposure to gilts, which performed well during the market collapse in the summer. But with the yield on 10-year gilts at around 2 per cent, Apollo is reluctant to hold an asset class that would lose investors money in real terms due to the effect of inflation.
Apollo fund manager Tom McGrath says: “We probably should have had a bit less in investment trusts and structured products in 2011. But we are ahead of the targets we set ourselves and are happy with the positioning of the funds.”