Panellists added 37 funds to the Adviser Fund Index during last month’s rebalancing, bringing several previously unrepresented companies into the benchmark series.
Alliance Trust Asset Management, Aquila Capital, Baring Asset Management, Close Asset Management, Liontrust, Morgan Stanley Investment Management and Veritas Asset Management all entered the indices in May.
Martin Currie China was the most popular addition overall. The fund was chosen by three panellists for the aggressive index and received one selection in each of the balanced and cautious benchmarks. The portfolio’s arrival came despite its relatively short track record.
Martin Currie launched the 40-60-stock Oeic in March 2010 for James Chong, who also manages the firm’s longer-established greater China Sicav.
May also saw the arrival of Budge in the list of AFI panellists. The firm, a Harrogate-based adviser to private and corporate clients, is represented by Chris Wise, a former AFI fund selector for RSM Tenon. Wise, who joined Budge as a director in February, chose three previously unrepresented funds during the rebalancing – Henderson preference and bond, M&G managed growth and Swip multi-manager diversity.
M&G managed growth appears in Wise’s aggressive and balanced selections. The £1.3bn portfolio, managed by Graham French, invests in a combination of M&G funds and individual equities.
At the end of April, the portfolio held a third of its assets in French’s £6.6bn global basics Oeic, with a further third in M&G global growth and M&G recovery combined.
Wise says: “People may not like using a fund of funds, particularly one that invests in the provider’s own funds. But look at what it is giving you. You have got Graham French giving you M&G’s best funds and top stock picks. It is one of those things you tuck away as a core element to your equity weighting.”
M&G managed growth and Newton real return each form 15 per cent of Wise’s AFI balanced portfolio.
Wise added the Henderson and Scottish Widows Investment Partnership funds to his cautious selection. Swip multi-manager diversity, a £200m multi-asset portfolio co-run by Mark Harries and Simon Wood, had equity, bond, hedge fund, property and commodity allocations in April.
Wise says: “The mindset of Harries and Wood is not to lose capital but in the longer term they aim for a cash-plus return, so an equity-like return with, say, two-thirds of the risk. In the multi-asset or multi-manager area, we want guys who have got a process that caps equity exposure and where we are getting paid for the risk that we are taking. We are looking for good, risk-adjusted numbers and they really have delivered.”
Wise chose Henderson preference and bond as a diversifier for his holdings in M&G optimal income and L&G dynamic bond. He says: “It is nice to have two or three managers. They may think the same but they are managing in different ways.”