Volatility, downside risk, historic yield and the amount of value a manager adds to his/her benchmark are also important areas to consider when analysing performance.
In some cases, these measures become just as important as total return; for example, an investor who chooses an Absolute Return product would be willing to sacrifice the potential for big returns for consistency and minimal downside risk.
In our first instalment of the "well-rounded" series, FE Trustnet will examine Absolute Return and Managed funds that excel across the board.
Absolute Return
Since IMA Absolute Return was only launched as an official sector in April 2008, there are very few funds with a five-year track record. For this reason, the study will focus on a three-year period.
Insight Absolute Insight is far and away the most well-rounded Absolute Return fund of the last three years. FE Alpha Manager Reza Vishkai’s £224m fund is the sixth-best performing fund in the sector since September 2008, with returns of 20.39 per cent – more than twice as much as the average Absolute Return vehicle.
As well as this, the fund is the fourth least volatile in the sector over three years, and had a maximum loss of just 2.13 per cent – a figure that was only beaten by Insight Absolute UK Equity Market Neutral.
Performance measures of fund vs sector over 3-yrs
| Name |
Returns (%) |
Volatility (%) |
Max loss (%) |
Alpha (%) |
| Insight Absolute Insight |
12.19 |
2.98 |
-2.13 |
4.88 |
| IMA Absolute Return |
5.47 |
4.01 |
-5.54 |
1.43 |
Source: FE Analytics
Despite this consistency, only four funds have a higher Alpha than Insight Absolute Insight– meaning they added more value to their benchmark – over a three-year period.
Vishkai’s vehicle is a fund of funds, with only six holdings. Around a quarter of its assets are invested in money markets. It has a total expense ratio (TER) of 1.29 per cent and a minimum investment of £5,000.
Active Managed
IMA Active Managed has an abundance of well-rounded performers. Eight funds are top-quartile in terms of returns, volatility, Alpha and maximum losses over a five-year period.
The pick of these – CF Ruffer Equity & General – is the fifth-best performing Active Managed fund over five years, with returns of 36.68 per cent. Alex Grispos’s vehicle has the second-highest Alpha in the sector during this time, is the second least volatile, and has a maximum loss of just 8.94 per cent.
Trojan Capital, Investec Global Strategic Managed and Jupiter Merlin Growth Portfolio were among the other top all-rounders.
Balanced Managed
Martin Gray’s CF Miton Special Situations Portfolio is one of nine funds that are top-quartile performer across the board. It tops the sector over a 10-year period, and only four funds have beaten it over five years.
Gray, who is considered to be one of the best defensive managers in the market, has delivered these returns without exposing his clients to much risk. CF Miton Special Situations Portfolio is the least volatile Balanced Managed fund in the sector over five years, has the lowest maximum losses, yet in spite of these defensive characteristics, the fund has the fourth-highest Alpha in the entire sector.
Performance of fund versus sector over 5-yrs
Source: FE Analytics
The manager is currently very cautious on the global recovery, and has a quarter of his portfolio invested in cash.
Sebastian Lyon’s £1.3bn Trojan fund is also well worth a mention. The fund is a top-three performer in terms of returns over one-, three-, five- and 10-year periods, and only Gray’s CF Miton Special Situations Portfolio and CF Miton Strategic Portfolio are less volatile.
Cautious Managed
CF Ruffer Total Return is by far the best-performing fund in IMA Cautious Managed over three, five and 10 years, but it fails to impress in the volatility standings.
Although 13 funds have returned more than IM Matterley Regular High Income, Chris Harris and Chris Evans’ vehicle must go down as the most well-rounded in the Cautious Managed sector.
Investors who choose a Cautious Managed fund want decent returns with very little risk, which is exactly what IM Matterley Regular High Income has delivered since it was launched in 2006.
The fund is as volatile as the average Absolute Return vehicle, has the lowest maximum losses in its sector, but with returns of 19.77 per cent, it has beaten the FTSE All Share over five years.
Performance of fund vs sector and index over 5-yrs
Source: FE Analytics
IM Matterley Regular High Income is also one of the highest yielding funds in its sector. It currently has a one-year historic yield of 4.16 per cent, which is higher than the average UK Equity Income fund.
In next week’s instalment, FE Trustnet will examine the top well-rounded funds in the UK Equity Income, UK All Companies and UK Smaller Companies sectors.