The Standard Life Investments MyFolio range is holding neutral positions on all its asset classes for the first time since its launch in 2010.
Speaking to Money Marketing, SLI head of fund of funds management Bambos Hambi says the range of 25 funds, which hit £10bn in assets in October, is currently not taking strong positions within the different risk-rated funds because of the challenging market environment.
Hambi says: “We have never been neutral on all asset classes. In this environment, we have decided to neutralise a lot of our positions. At the moment we don’t have big strong positions.”
With more robust data coming from the UK Hambi is positive on equities, but remains underweight the asset class by 1 per cent across the range.
He is also overweight US equities by 1 per cent and “will maintain that position”.
He says: “We still prefer overseas currencies to sterling, like the dollar and the yen. We’ve also increased our global real estate investment trusts, because they are high yielding and should benefit from sustained policy support and quantitative easing.”
Hambi says the cash position in the range has not increased and that SLI’s strategy has been neutral on cash for the past two years.
Hambi says: “We expect more volatility, especially on the triggering of Article 50. But having 18 asset classes in MyFolio, mostly overseas, protects from these savage falls in the markets.
“In the past when we started we had very big positions in high yield bonds and corporate bonds where sustainable yield was a big theme for us. In US equities as well, we were almost up to our maximum, we’ve had very low position in Asian and emerging markets equities.”
MyFolio was launched in October 2010, with a suite of 15 growth fund options, followed by a further 10 income funds in January 2012. Hambi says in October the range has experienced “record inflows”, despite market uncertainties.
He says: “In 2010 we were the biggest multi-manager in the market and were managing £1bn. The market has really expanded and a big part of that increase has come from understanding what the changes in RDR meant for advisers.
“We were very early adopters of risk-targeted funds. Advisers had a difficult choice to pick the right funds within those asset classes. Clients also felt we were not good as an industry in protecting on the downside so one of the asset class we use to protect from that is absolute return, both multi-asset and bonds.”
In July, the team added the external TM Fulcrum Diversified Core Absolute Return fund to his Multi Manager range, rather than expose the range solely to its flagship and recently underperforming £26.8bn GARS fund.
Annual charges on the five-fund Market funds range from 1.09 per cent on the lowest risk fund to 1.12 per cent on the highest risk fund.
Hambi says: “Some advisers are focusing more on costs so have 80 per cent in the Market range which is predominantly made of passive funds, and 20 per cent in active.”
Over one-year, MyFolio’s performance ranged from 7.64 per cent for a lower risk fund to 25.29 per cent for one of MyFolio’s highest risk funds, according to FE.
Since the launch of the growth funds in 2010, returns range from 30.72 per cent to 72 per cent.