Morningstar downgrades ‘inactive’ Axa Distribution fund

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Morningstar has downgraded the Axa Distribution fund for its “inactive approach” to management, saying it has delivered average performance.

The £991m fund, run by Richard Marwood, has been downgraded from a bronze rating to neutral after analyst meetings.

“Despite the long experience of the fund’s manager, Richard Marwood, and his three colleagues who work with him on distribution products, the fund applies a relatively inactive approach and has delivered performance over a number of market cycles that is not significantly different from average. Our conviction in the offering has therefore reduced,” says Randal Goldsmith, senior manager research analyst at Morningstar.

Over the past year the fund has lost 1.68 per cent, compared to a 0.86 per cent gain for the Mixed Investment 20%-60% Shares sector, while the past six months have seen the fund lose 4.23 per cent compared to a 3.31 per cent loss for the sector.

However, longer term performance has been more robust, returning 54.87 per cent over 10 years compared to 45.77 per cent. 

Richard Marwood, manager of the Distribution fund at Axa IM, says: “The fund deliberately skews its bond portfolio to shorter duration bonds to lower the volatility of the non-equity portfolio. During the strong run in bonds seen in recent years, longer dated bonds have performed better than shorter dated ones and that may have affected performance relative to peers.

“We see our long-term strategy as being well suited to cautious investors and we will continue to implement our disciplined approach to asset allocation and stock selection, despite any short term headwinds.”

Axa recently launched the Lifetime Distribution fund, to be managed by Marwood, as a pension freedoms products to provide an income in retirement.