Multi-asset strategies with greater allocations to technology stocks have continued to dominate the best performing funds over three years, as monetary and fiscal stimulus saw equity markets rallying during the latter half of 2020.
With investors holding open-ended funds for an average of three years, according to the Investment Association, three years has become an increasingly important period for investors to measure performance.
However, three-year rankings are not set in stone and leadership can change as market conditions shift and strategies just celebrating their third anniversary enter the rankings.
Having previously looked at equity funds and bond strategies, Trustnet has ranked all the multi-asset funds in the IA universe by their three-year returns and compared their current standings with six months ago.
As markets continued rallying during the latter half of 2020, following a significant contraction during H1, there has been some change in the top-25 multi-asset fund three-year rankings, as the table below shows.
And as before it was strategies from sectors with greater equity allocations – such as IA Flexible Investment (which allows up to 100 per cent in equities) and IA 40-85% Shares – that dominated the top 25.
Top-25 multi-asset funds over 3yrs
Source: FE Analytics
The best performing multi-asset fund was the £629.5m Liontrust Sustainable Future Managed Growth fund from the IA Flexible Investment sector, which moved up one place into the top spot over the past six months, having made a return of 70.18 per cent.
The five FE fundinfo Crown-rated, growth-orientated multi-asset fund is overseen by Peter Michaelis, Simon Clements and Chris Foster and uses its proprietary Sustainable Future process to identify key structural growth trends shaping the global economy of the future, investing in well-run companies whose products and operations are able to capitalise on those trends.
Performance of fund vs sector & benchmark over 3yrs
Source: FE Analytics
Despite being knocked off the top, sister strategy Liontrust Global Alpha was second-ranked with a total return of 64.09 per cent. The £171.9m, five crown-rated fund is overseen by Robin Geffen.
Some 92 per cent of the fund is invested in equities, with the remainder invested in two Liontrust strategies – Liontrust Global Technology and Liontrust Global Smaller Companies – also managed by Geffen.
It has a technology bias with 60.2 per cent invested in the sector – which has performed strongly in the post-financial crisis growth-led bull run and benefited from the stay-at-home conditions of the pandemic.
Another top performer was Baillie Gifford Managed, a £7.6bn mixed investment strategy overseen by Iain McCombie – lead manager of Baillie Gifford's UK core strategy – and Steven Hay, head of income research.
The five crown-rated fund has made a total return of 58.11 per cent over the past three years.
Sustainable strategies such as Liontrust Sustainable Managed Future Growth and others with an ESG (environmental, social & governance) mandate have risen thanks to their exposure to sectors benefiting from the lockdown conditions, such as technology.
Indeed, three other Sustainable Future strategies found their way into the top-25: Liontrust Sustainable Future Managed, Liontrust Sustainable Future Cautious Managed, and Liontrust Sustainable Future Defensive Managed.
Another top-performing strategy with a sustainable focus was fifth-placed Royal London Sustainable World Trust.
The £2.2bn five crown-rated fund is managed by FE fundinfo Alpha Manager Mike Fox and is Royal London Asset Management’s oldest sustainable strategy. Fox looks for companies advocating for positive change and screens out companies in non-ethical sectors, as such it has a high weighting to companies in healthcare and technology.
Over three years it has made a total return of 51.55 per cent.
Funds with greater equity allocations weren’t only found at the top of the performance table, however. There were plenty of strategies with more flexible mandates found at the bottom of the three-year performance table also.
Notably, these included a number of income and value-oriented strategies, as well as those with a greater UK focus.
Bottom-25 multi-asset funds over three years
Source: FE Analytics
At the bottom was Jupiter Distribution and Growth, managed by Talib Sheikh since 2020.
The £261m fund targets income and a return in excess of that of its composite benchmark - composed of 75 per cent FTSE All Share exposure, 12.5 per cent BAML High Yield Bond, and 12.5 per cent BAML Investment Grade Bond. Currently, three-quarters of the fund is held in stocks. It has made a loss of 14.17 per cent over the three years to end-2020.
The second-worst performer is Kartik Kumar’s multi-asset strategy Artemis Strategic Assets, which was down by 8.13 per cent. The £256.8m fund that makes use of short positions has been adding to its long technology positions more recently including a 4 per cent stake in Chinese internet giant Alibaba, although it continues to hold challenged sectors such as airline Easyjet.
Rounding out the bottom three with a loss of 5.09 per cent was the £105.1m HSBC Monthly Income fund from the IA UK Equity & Bond Income sector. The fund is overseen by Mohamed Siddeeq and Justin Turner and invests in UK bonds and equities. The UK equity market saw dividends down 44 per cent in 2020, as companies conserved cash during the pandemic or – in the case of banks – were ordered to suspend payments.