These funds are a one-stop shop for investors who want exposure to a number of different asset classes. They have all the advantages of discretionary funds in that they leave investment calls in the hands of an industry professional, but they are more easily accessible and comparable.
Adrian Lowcock (pictured), senior investment manager at Hargreaves Lansdown, says three managers stand out in this department: Sebastian Lyon, Alastair Mundy and John Chatfeild-Roberts.
Jupiter Merlin Growth Portfolio
"Chatfeild-Roberts has been around the longest, and has a brilliant track record across a number of different strategies. For a long-term investor I’d look at something like the Jupiter Merlin Growth Portfolio."
Jupiter Merlin Growth is a fund of funds, meaning that it invests in other investment portfolios rather than single stocks.
The £1.68bn portfolio sits in the IMA Flexible Investment sector, meaning that it can hold up to 100 per cent in equities. At present it has more than 90 per cent in equity funds, with the remainder in cash and alternative portfolios, including ETFS Physical Gold.
It has a 33.3 per cent exposure to the UK, making the country its biggest regional position, followed by the US at 24.5 per cent, Asia Pacific ex Japan at 14 per cent, Europe at 7.3 per cent and Japan at 4.2 per cent.
Chatfeild Roberts and co-managers Peter Lawery and Algy Smith-Maxwell hold some of the biggest names in the industry, including AXA Framlington UK Select Opps, Findlay Park American and First State Asia Pacific Leaders.
Performance of fund vs sector and index
| Name | 1yr returns (%) | 3yr returns (%) | 5yr returns (%) | 10yr returns (%) |
|---|---|---|---|---|
| Jupiter - Merlin Growth Portfolio | 5.83 | 23.14 | 23.59 | 177.79 |
| IMA Flexible Investment | 8.09 | 16.54 | 6.2 | 91.58 |
Source: FE Analytics
Jupiter Merlin Growth Portfolio is a consistent performer in its sector, delivering top-quartile returns over three-, five- and 10-year periods, with around the same volatility. Over the last decade it has delivered 177.79 per cent – almost twice as much as its sector average.
It has four FE crowns, requires a minimum investment of £500 and has a total expense ratio (TER) of 2.57 per cent.
Trojan
"If I was to go for a multi-asset manager that holds individual stocks rather than other funds, Sebastian Lyon’s Trojan fund would be high up the list," Lowcock said.
"The fund has protected well during tough times, but over the long-term he has still managed to keep up with the market."
"He invests in a lot of alternatives, which is good for diversification," he added.
Performance of fund vs sector and index over 10-yrs
Source: FE Analytics
The £2.2bn Trojan fund has returned 157.5 per cent over the last decade, with an annualised volatility of 7.05 per cent; by contrast, its FTSE All Share benchmark has returned 123.2 per cent, with volatility of 14.24 per cent.
FE Alpha Manager Lyon has also significantly outperformed the index over three and five years and is a top-quartile performer in the IMA Flexible Investment sector.
While the fund has the flexibility to invest 100 per cent of its assets in equities, Lyon currently has just 30 per cent in this asset class.
Around a third of this is in UK-domiciled stocks, with the rest split between the US, Europe and Japan. British American Tobacco (BAT), Berkshire Hathaway and Microsoft are all top-10 holdings.
Lyon has 12 per cent in bullion and 6 per cent in gold equities, and 28 per cent in UK and US index-linked bonds. Around 16 per cent of his assets are in cash, which gives him the flexibility to buy up cheap stocks if the markets fall sharply.
Trojan is soft-closed to new money, but is available through most major platforms. It has a TER of 1.03 per cent and five FE crowns.
Investec Cautious Managed
"He might not get as much coverage as the other two, but Alastair Mundy has proven himself time and time again," said Lowcock. "Investec Cautious Managed is a real heavyweight in this area.”
The fund holds a mixture of equities and bonds for both capital growth and income. The equity portion is managed with a contrarian approach, as the manager prefers to buy stocks that everyone else is selling.
The debt portion is used to stabilise the portfolio and consists mainly of higher-quality government bonds, because the fund manager believes there is a wider range of these to choose from, which gives him flexibility.
It is currently yielding 1.22 per cent. In the total return stakes it is a top-quartile performer over five and 10 years, although only second quartile over three.
Performance of fund vs sector over 10-yrs
Source: FE Analytics
It does tend to underperform its peers in down markets, however, which is likely to be a result of Mundy’s contrarian approach.
The FE Research team is also a big fan of the portfolio, and includes it in the FE Select 100.
However, analyst Amandine Thierree pointed out that it should not be used as a pure income play, given its low yield.
Investec Cautious Managed requires a minimum investment of £1,000 and has a TER of 1.61 per cent.