AXA Framlington Managed Balanced, Baillie Gifford Managed and two products run by McInroy & Wood are some of the IA Mixed Investment 40-85% Shares funds that have established long-term track records of consistent outperformance, research by FE Trustnet suggests. 
In the next article of this series, we have reviewed some of the oldest members of the former balanced multi-asset sector to see which funds might have stood the test of time.
To do this, we have taken all of the funds with a track record of 20 years or more, then examined their returns over 61 rolling five-year periods spanning 30 June 1998 and 30 June 2018. A shortlist of those with an average five-year decile rank of 3.5 or lower was created.
From the popular sector, there were six funds that made the grade. In the following article, we take a closer look at them in order of their average decile ranking.
McInroy & Wood Balanced
The IA Mixed Investment 40-85% Shares fund with the best average five-year decile ranking is McInroy & Wood Balanced, which scored 2.52. Of the 61 periods examined in this research, the fund was in the sector’s top quartile for 21 of them.
Over the two decades we looked at, the £712m fund generated a 378.28 per cent total return. This is the second highest of the 80 IA Mixed Investment 40-85% Shares members with a long enough track record.
Performance of fund vs sector between 30 Jun 1998 and 30 Jun 2018
Source: FE Analytics
McInroy & Wood Balanced is built around a portfolio of direct investments in international equities and fixed interest securities, with an equal emphasis placed on the generation of income and on capital growth.
The managers will also look outside of stocks and fixed income when building the portfolio: “Our investment approach continues to be broadly diversified. The notion of a permanently low-growth, low-interest rate environment seems misconceived. Accordingly, our allocations include some exposure to gold to balance the weightings in equities and bonds held in portfolios.”
McInroy & Wood Balanced has a clean ongoing charges figure (OCF) of 1.14 per cent and is yielding 1.40 per cent. It holds four FE Crowns.
AXA Framlington Managed Balanced
Next up is AXA Framlington Managed Balanced, which has been run by Jamie Hooper since November 2006. The £1bn fund is built around global equities with allocations to bonds and cash to dampen the portfolio’s overall volatility.
Our data shows that the fund’s average rolling five-year decile ranking stands at 2.57 per cent, with 10 of the periods examined being top decile. Its 286.1 per cent total return over the full 20 years is the eighth highest in the peer group.
The fund launched in December 1992 and was managed for the bulk of its track record by Richard Peirson, who retired in January 2017 after a transition period to pass the fund to then-deputy manager Hooper.
Square Mile Investment Consulting & Research, which gives the fund an ‘A’ rating, said: “This fund is managed in a simple and straightforward manner and uses a consistent investment process which has been applied for over 20 years. The approach utilises the stockpicking abilities of specialist investment resources within AXA Investment Management. The strategy has proven successful across a number of market cycles and has provided strong longterm returns for investors.”
AXA Framlington Managed Balanced has a 0.70 per cent OCF and is yielding 1.31 per cent.
EdenTree Higher Income
The next fund on the shortlist – EdenTree Higher Income – has produced the highest total return of the IA Mixed Investment 40-85% Shares sector over the 20-year period after making 396.52 per cent.
Performance of fund vs sector and index between 30 Jun 1998 and 30 Jun 2018
Source: FE Analytics
Additionally, the fund has established an average decile ranking of 2.67 and spent 28 of the 61 five-year periods we reviewed in the top decile of its peer group.
The fund launched in November 1994 and has been headed up by FE Alpha Manager Robin Hepworth, chief investment officer at EdenTree Investment Management, since then. Hepworth was joined on the portfolio by David Katimbo Mugwanya in September 2016, who is its co-manager.
The investment process behind the fund is value-based and contrarian in style, with a conservative long-term approach and the provision of income with preservation of capital taken as the prime responsibility.
EdenTree Higher Income has an OCF of 0.78 per cent and is yielding 4.44 per cent.
Invesco Perpetual Managed Income
Nick Mustoe’s £347m Invesco Perpetual Managed Income fund comes next after averaging a five-year decile ranking of 3.03 in the 20 years covered here. Only six of these periods were spent in the IA Mixed Investment 40-85% Shares sector’s top decile but its 272.99 per cent cumulative return is the 13th highest in the peer group.
Mustoe – who is the chief investment officer of Invesco Perpetual – has been the named manager on the fund since June 2013. Previous managers since its launch in February 1997 include Bob Yerbury and Ian Brady.
Performance of fund vs sector between 30 Jun 1998 and 30 Jun 2018
Source: FE Analytics
This is a fettered fund-of-funds that is built around Invesco Perpetual’s range. Although Mustoe is the named manager, it draws resources from across the asset management house; for example, Mustoe chairs a monthly global investment strategy meeting which features input from chief economist John Greenwood and all members of the investment team based in Henley.
Invesco Perpetual Managed Income’s largest allocation at present is to Mark Barnett’s Invesco Perpetual Income fund, followed by Invesco Perpetual European Equity Income, Invesco Perpetual US Equity, Invesco Perpetual Corporate Bond and Invesco Perpetual UK Strategic Income.
The fund has a 1.08 per cent OCF and is yielding 2.53 per cent.
McInroy & Wood Income
The next fund on the list is the second entry from McInroy & Wood. The £280m McInroy & Wood Income fund has an average five-year decile ranking of 3.16 after spending 26 of these 61 periods in the peer group’s top decile.
Over the full 20 years we looked at in this research, the fund made a total return of 282.28 per cent – which was the 10th highest of the 80 funds with a long-enough track record. However, performance has struggled more recently and is reflected in the fact that the fund is in the bottom decile for the last five rolling five-year periods we reviewed.
McInroy & Wood Income aims to grow the real value of investors’ capital and income, with an emphasis on the generation of income. Like McInroy & Wood Balanced, it is built around equities and bonds but will hold other assets such as gold.
The fund has a 1.13 per cent OCF and is yielding 2.79 per cent.
Baillie Gifford Managed
With an average decile rank of 3.49, the final IA Mixed Investment 40-85% Shares member to make it onto the shortlist is the £3.6bn Baillie Gifford Managed fund. Some 21 of these 61 periods saw the fund in the top decile of the peer group.
The five FE Crown-rated fund made a 296.44 per cent total return between 30 June 1998 and 30 June 2018, which is the seventh highest in the sector for this time frame. FE Analytics shows it is in the top decile over one, three, five and 10 years as well.
Performance of fund vs sector between 30 Jun 1998 and 30 Jun 2018
Source: FE Analytics
Baillie Gifford Managed has been run by Iain McCombie and Steven Hay since November 2012. It launched in April 1987 and was managed by Elaine Morrison between November 2012 and September 2014; before this, there was no named manager.
The fund is designed to act as a ‘one-stop shop’ for investors seeking growth and draws on resources from all of the equity teams at Baillie Gifford. Like the other funds run by the respected asset management house, there is a strong bias to bottom-up stockpicking and investing for the long term.
It has a 0.43 per cent OCF and is yielding 1.42 per cent.