Lipper Leaders (UK): Getting the balance right

Ed Moisson uses the Lipper Leaders scoring system to analyse the best performing funds in the IMA Mixed Investment 20-60% Shares sector.

Recent stock market volatility has again highlighted why many investors prefer a more balanced portfolio and choose funds sitting in the Mixed Investment sectors. Funds in the sector formerly known as Cautious Managed come under the Lipper Leaders spotlight this month. Each fund must have between 20% and 60% equity exposure, as well as a minimum of 30% held in bonds and cash.

The funds included in the table are those with the best 3 year total returns in this sector. Including the Lipper Leader ratings reveals that these selected funds have also delivered excellent Consistent Returns (risk-adjusted performance relative to their peers) over the past 5 years.

The fund that stands out by achieving the best Lipper Leader scores for all four criteria is the Aberdeen Managed Distribution fund. Among the group of ten funds shown here Aberdeen has the worst 1 year performance, but conversely it has been the least reliant on short term performance to achieve its longer-term track record. Just under half of the fund’s portfolio is currently invested in the company’s own bond funds.

There are several other funds that come close to this achievement. Invesco Perpetual’s Distribution fund (58% currently held in bonds) is managed by Paul Causer, Paul Read and Neil Woodford, while the Kames Ethical Cautious Managed fund (holding a lower 36% in bonds, although a relatively high 10% in cash), is managed by Audrey Ryan and Iain Buckle, a fund that is also managed within predefined ethical criteria.

While the funds above target a balance of income and capital growth in their objectives, two other funds that have also achieved impressive Lipper Leaders scores emphasise their aim of generating higher levels of income for investors. These funds are the Julian York managed HSBC Income Fund of Funds (with 53% in bonds) and Aviva Investors Distribution fund (holding 58% in bonds), which is managed by James Vokins and Chris Murphy.

This article originally appeared in the July 2013 edition of ‘Investment Life & Pensions Moneyfacts’ magzazine.