New research from Informed Choice, the award-winning firm of Chartered Financial Planners, has revealed mixed results from the largest cautious managed funds.
Informed Choice took a closer look at the 20 largest funds in the IMA Mixed Investment 20-60% Shares sector and found a big variance in terms of performance, risk, cost and suitability for investors.
News release: Mixed results from cautious managed funds
Only two of the 20 largest cautious managed funds scored above their 80% minimum threshold for fund suitability. Jupiter Merlin Income (92%) and Invesco Perpetual Distribution (83%) were a class apart from the other 18 largest funds, which scored an average of 55% of the maximum possible suitability score.
Depending on the fund selected by investors, they could have experienced a return between +35% and -3.3% over the past three years. These 20 largest cautious managed funds had an average three year return of 23.9%, beating the sector average as a whole which returned 22.4% for investors.
Looking at cost, Informed Choice established that the most expensive big cautious managed fund is also one of the poorest performers. Henderson Multi Manager Income & Growth has an Ongoing Charge of 2.35% per annum, with a disappointing three year return of 19.34%.
Some of the cheapest big cautious managed funds were also poor performers, with JPM Cautious Return (1.43% Ongoing Charge), BlackRock Cautious Portfolio (1.40%) and 7IM AAP Balanced (1.11%) all failing to beat the sector average over the past three years.
The Investment Management Association (IMA) renamed this sector at the start of the year, making it clearer to investors that cautious managed funds could invest up to 60% in company shares.
The full Balancing Act report is available to download for free from the Informed Choice website at www.icl-ifa.co.uk/balancing-act.
