The values of the three Adviser Fund Indices saw little change during the last AFI season starting on May 1. The Aggressive AFI was down by 0.7 per cent from May 1 to October 26, according to Financial Express, while the Balanced and Cautious indices recorded small gains of 1.8 per cent and 2.6 per cent respectively.The six-monthly rebalancing points provide the panellists with the chance to revise their AFI portfolios and, as from November 1, the constituent funds and weightings of the three indices changed to reflect their updated recommendations. When formulating their revised portfolios, the panellists will have given thought to how the three AFIs have performed to date. The performance of the indices during the global equity market correction starting in mid-May can provide an indication of how the AFIs react to marked market downturns. From May 10 to June 14, the Aggressive AFI dropped by 13.3 per cent in value while the FTSE All-Share fell by 9.7 per cent. The performance of the Balanced and Cautious AFIs were better, with the lowest-risk index suffering least during share price falls. Performance of Aggressive AFI constituents varied over the last AFI season. The best two performers over the six months to October 26 were Neil Woodford’s Invesco Perpertual high income, up by 12 per cent, and Invesco Perpetual income funds, up by 11.5 per cent, according to Financial Express. In contrast, Legg Mason Japan equity, down by 28.1 per cent, and Fidelity Japan special situations, down by 21.7 per cent, recorded significant falls. All nine Aggressive index constituents from the IMA Japan sector were among the 14 worst-performing funds in the riskiest AFI. The best 20 returns from Aggressive constituents comprised 12 funds investing primarily in UK equities and three commercial property portfolios. The lower exposure of the Balanced and Cautious AFIs to Asian equities and emerging markets shares guarded the lower-risk indices against falls seen in these markets. Fluctuation levels exhibited by the Balanced and Cautious indices have continued to be lower than those of the Aggressive AFI. From November 1, 2004 to September 30, 2006, the annualised volatility of the Aggressive AFI was 11.25 per cent compared with 8.34 per cent from the Balanced AFI and 5.39 per cent from the Cautious index. However, the long-term performance of the riskiest AFI is strong despite higher volatility levels. The Aggressive AFI was up by 46.6 per cent from November 1, 2004 to October 26, 2006, while the Balanced index, up 36.9 per cent, and Cautious AFI, up 29.7 per cent, have lagged behind. The Aggressive index return was just shy of that of the FTSE All-Share, up 47 per cent, over the period.