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Jane says low-risk funds can still deliver results

Adopting a low-risk strategy when constructing multi-manager portfolios does not excuse the performance of funds that rank low in their sectors, claims M&G’s David Jane.

He says funds that lead the performance tables do not necessarily have to take higher levels of risk to maintain outperformance.

In his view, it is unacceptable to be lower risk but underperforming as clients know it is possible to construct lower-risk portfolios that can deliver.

Jane says a well-diversified portfolio is one of the ways that multi-managers can achieve performance without cranking up risk.

His cautious multi-asset fund is diversified not only through region, asset class and fund manager but also across structure in a hybrid multi-manager style. For example, if he wants to hold UK equities, he can invest in direct shares, exchange traded funds, futures, investment funds from M&G and those provided by third-party managers.

Jane says: “We start with an investment view and look at the most efficient way of implementing that view. If we choose M&G funds, they cost less because we get a full rebate but the total amount invested in M&G funds is currently less than 20 per cent. We will go where necessary because our job is to create a well-diversified low-risk portfolio.”

The multi-asset cautious Jane: ‘No need to crank up risk’portfolio until recently had a high exposure to Government bonds and no corporate bonds but Jane has been able to pick up attractively priced corporate bonds.

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