| The Adviser Fund Index (AFI) is made up of the recommended portfolios of leading UK financial advisers. Based entirely on the funds actually recommended to clients, the AFI Agressive, Balanced, Cautious portfolios carry real-life credibility, and provide insight in terms of the benefits of holding top quality funds |
This is best illustrated by the inclusion of the Ignis Argonaut European Absolute Return fund and the Gartmore UK Absolute Return fund . Both were only launched this year and both have had a reasonable start to life; the Gartmore fund made 6.85 per cent in the six months to 31 October 2009, while the Ignis fund made 8.45 per cent. By contrast the IMA Absolute Return sector produced a return of 6.8 per cent. While these funds might be new they are far from unknown, each being backed up by well known teams and strategies.
Gartmore's fund is run by hedge fund manager Ben Wallace, who is employing the same long short strategy used in his Alphagen Octanis hedge fund. This has made 44.98 per cent over the last three years, and with half the volatility of the FTSE All Share index. While the two funds are not identical it at least proves the viability of the strategy and can give investors some insight into what to expect from the fund. This has clearly been the panel's thinking as the fund now makes up 1.13 per cent of the AFI Cautious index.
Source: Financial Express Analytics
While the Ignis Argonaut European Absolute Return fund is relatively new, the team behind it are not. Argonaut is a small boutique specialising in European equities and run as a joint venture with Ignis Asset Management.
The fund is managed by Barry Norris co-founder of Argonaut and one of the most successful managers in the IMA Europe ex UK sector. Norris also runs the Ignis Argonaut European Alpha fund which returned 8.56 per cent for the three years to the end of October and outperformed its sector by 7.37 per cent.
Norris has a strong track record in stock picking, resulting in a Trustnet Alpha Manager rating. This record is likely to transfer well to the long short strategy employed with the European Absolute Return fund, and is likely the reason for its inclusion in the AFI Aggressive index.
The panel included a relatively old fund with the CF Odey UK Absolute Return fund also picked for the first time this season. Launched in March 2008 the fund has managed an 85.06 per cent return since its launch to the end of October 2009, and is the best performing fund in the sector on one year performance.
Because of the relative youth of the Absolute Return sector three year performance comparisons are difficult. It is important that investors do as much due diligence on a fund’s strategy. By selecting funds from good stables, the AFI panel has, hopefully, picked some pedigrees.