Royal London stood out from the crowd of mixed asset investments, with its sustainable aggressive and balanced funds anchoring themselves to the first quartile of their sectors on a rolling returns basis. But they weren’t the only sustainable funds coming out on top.
In this series, Trustnet is looking at the three-year rolling returns of Investment Association funds calculated monthly over the past decade. From the 120 data points collected, we derived in percentage terms how often a fund placed itself in the first quartile of its peers, whereby we can highlight the most consistent top funds of the past decade.
This week it’s the turn of funds in the IA Mixed Investment sectors, which differentiate between 0-35% Shares, 20-60% Shares and 40-85% Shares. No funds within the first sector, which has the lowest exposure to equities, made it into the list. Here we had a cut-off limit for funds in the first quartile 65% of the time.
First up are Royal London Sustainable World Trust and Royal London Sustainable Diversified Trust, which invest 84.2% and 48.2% of the respective portfolios in equities. The former spent 97.5% of the past decade in the first performance quartile and the remaining 2.5% in the second quartile of its peers, while the latter remained 96.7% of the time in the first, and 1.7% in the second and third of its peers.
Three-year rolling returns of fund over 10yrs against sector
Source: FE Analytics
The two vehicles are managed by the same team, which includes FE fundinfo Alpha Manager Mike Fox, who follows a process that was praised by Square Mile analysts.
“The team is aware that its main strength is the process and its output. This helps identify sustainably strong and fundamentally sound businesses, and therefore they don't spend a significant amount of time thinking about the broader asset allocation, which stays relatively stable,” they said.
“We see the fund as a strong option for investors who wish to invest in a mixture of equities and bonds from companies with sustainable business practices.”
Also in the top quartile of its sector more than 90% of the time was Liontrust Sustainable Future Managed, which earned the third position.
For investors who are looking to grow their capital and do good with their money, this fund is “a strong choice”, Square Mile analysts said.
“The heritage of the investment team and the experience they have gained over many years, managing client assets in a consistent way, gives them an edge over competitors who have only recently grasped the responsible investment nettle,” they noted.
“We like the fact that the team only manage sustainable funds and are specialists committed to their tried and tested investment process.”
Further down the list, Janus Henderson Global Responsible Managed, AXA Global Sustainable Distribution and Quilter Cheviot Climate Assets Balanced all also focus on environmental, sustainability and governance (ESG) principles.
In fourth position is Baillie Gifford Managed, which has 19.8% of its portfolio in fixed interest, 1.7% in cash and the rest in equities.
It aims at producing long-term capital growth with a combination of active stock picking from regional equity portfolios, the best ideas from Baillie Gifford’s rates and currencies and credit teams, and investment grade and high yield corporate bond opportunities.
At the foot of the table, LF Waverton Portfolio has a similar asset split to Baillie Gifford Managed with an added 9.5% in alternatives. The two vehicles have an 85% correlation to each other.
This article is part of an ongoing series on rolling returns. In the previous instalments, we covered: IA UK All Companies, IA European, IA Global and IA Smaller Companies.