Money Observer Fund Awards 2018 - Mixed Asset

July 17, 2018

BEST HIGHER RISK FUND

LF Miton Worldwide Opportunities

1-year return: 8.7% | 3-year return: 40.2%

This fund scoops our Best Mixed Asset Higher Risk award for the first time, following a strong run that has catapulted it to the top of its peer group. It has outperformed the IA flexible investment sector by 6.4 per cent over one year and 23.2 per cent over three.

Run by Nick Greenwood, chief investment officer of Miton Asset Management, it adopts a multi-manager approach to investing for capital growth. Greenwood invests in other investment trusts and funds globally and looks to take advantage of discounts in the price of their shares. Closed ended funds can trade at either a premium or a discount to their net asset value, and it is these discounts that he aims to exploit.

Greenwood says that the investment trust universe is highly inefficient, and he is therefore able to use his expertise to identify trusts that have drifted from their fundamental value and as such are trading at the ‘wrong’ price. This therefore tends to be an instinctively contrarian approach, aiming to profit from the cycle of investor sentiment and catalysts for change in the market.

He combines investment trusts with open-ended funds to provide investors with what he sees as an ideal balance of assets and management styles. In making his selections, Greenwood conducts a considerable amount of fundamental research. His screening process involves an extensive schedule of meetings with specialist fund managers. The fund is well-diversified globally, with more than 60 positions and the largest one accounting for around 5 per cent of the fund .

BEST LOWER RISK FUND

MI Hawksmoor Vanbrugh

1-year return: 3.7% | 3-year return: 20.7%

Even though it has not delivered the highest returns, this fund is our Best Mixed Asset Lower Risk fund due to its superior risk adjusted returns over three years. The £134 million fund is in the first quartile of the IA mixed investment 20-60 per cent shares sector, having outstripped the average by 2.8 per cent over one year and 9.5 per cent over three.

Its managers, Richard Scott, Daniel Lockyer and Ben Conway, seek to provide both capital growth and income primarily from a diversified range of open and closed-ended funds. They aim to beat inflation, as measured by the consumer prices index, over three to five years. The fund does not have a yield target, but it holds bonds and other income-producing assets so typically generates some income; it is yielding 1.5 per cent at present.

The managers take a relatively cautious approach with the fund’s assets and seek to strike the right balance between the need to generate positive real returns and preserve capital.

They hold a variety of investments in terms of asset class, geography, fund management group and style of investment manager. One-quarter is currently in equities and one-third in bonds, with the rest split between absolute return funds, property, resources, private equity and cash. The UK is the highest geographical weighting, followed by the US and continental Europe. The remainder is in Asia, Japan and emerging markets.

HIGHLY COMMENDED HIGHER RISK FUND

Unicorn Mastertrust

1-year return: 9.6% | 3-year return: 40.6%

Unicorn Mastertrust is a newcomer to both our awards and our Rated Funds in 2018 on the strength of its consistently solid performance. It ranks in the first quartile of its sector over every time period analysed. It is a relatively small fund at just £76 million, but has been attracting a growing following thanks to its contrarian nature.

Manager Peter Walls invests in a wide range of investment trusts and seeks to take advantage of what he calls ‘pricing anomalies’. Although the average discount in the investment trust universe narrowed from 9 per cent in the wake of the June 2016 EU referendum to less than 2 per cent in 2017, he still sees opportunities, particularly among conventional equity trusts.

He can invest in investment companies of any size and the portfolio has a broad range, but is skewed towards small and mid-sized companies, where Walls believes growth prospects are more sustainable and valuations more attractive.

HIGHLY COMMENDED LOWER RISK FUND

Artemis Monthly Distribution

1-year return: 0.42% | 3-year return: 23.8%

This fund has received an award in this category for three years running. Having been highly commended in 2016, it took the top spot last year and has returned to the runners-up bench this year. It has also been a Rated Fund since 2016.

Although it has performed much in line with its peer group over the past year, its longer-term returns are impressive. It has beaten the average fund in the sector by 12.6 per cent over three years.

James Foster and Jacob de Tusch-Lec have managed the £815 million fund since inception in 2012. They are responsible for the portfolio’s respective bond and equity holdings, roughly split 60/40. The duo favour quality businesses in robust financial positions. The fund is different from its peers in having a significant level of exposure to overseas equities and bonds. It yields more than 4 per cent and income is paid monthly, making it ideal for pension investors drawing an income from their portfolios.

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