July 29, 2019

UK Lipper Leaders: Looking at Flexible Investment Funds–May 2019

by Jake Moeller.

The Investment Association (IA) Flexible Investment sector came about in 2012 as the Association of British Insurers (ABI) and IA sought to further harmonise their classification systems.

The Flexible Investment sector was largely borne from the former IA Active Managed classification. Today there are some 160 funds in this classification.

This is a dynamic classification

This is a sector where for investors the clue is in the name. It is one where there is no minimum equity, fixed income or cash requirement and it has become increasingly popular for fund managers who want a “go anywhere” mandate.

This poses some difficulty for investors when trying to make like-with-like comparison. Most of these funds in this classification are mixed-asset mandates (although mandates run from conservative portfolios through to aggressive) and there are also several equity-only products.

Considerable performance variation is possible

It should not surprise investors then that the variation in performance outcomes in this sector due to differing asset allocation profiles is potentially considerable.

For example, the top performing fund over the three-year period to the end of May 2019 has returned 57.3%, whilst the poorest performing fund over the same time has returned a paltry 0.3%.

Exhibit One. Top performing IA Flexible Investment funds ranked over 3-years (with 5-year history – to May 2019)

Source: Lipper for Investment Management, Lipper by Refinitiv. Past performance is not a reliable indicator of future performance.

Each of the Lipper Leaders metrics are compiled based on comparisons of funds within their Lipper classifications rather than the IA classification and our classifications are based on the actual asset allocation of the fund.

Lipper Leaders help distill a diverse classification

In this single IA classification for example, there are 50 funds from the Lipper Mixed Asset GBP Aggressive classification, 27 funds drawn from the Lipper Global Equities classification and 16 funds from the Lipper Mixed Asset GBP Balanced classification. Where there is evidence of genuinely flexible mandates these are placed into Lipper Flexible classifications (currently around 30 funds).

In this month’s table, we see quite a mixed bag of results which reflects the considerable style variation in these portfolios (although all ten funds contain a high equity content). Typically, this makes maintaining a high Preservation and Consistent Return more challenging.

Some funds have performed strongly across all Lipper Leader metrics

Remember that we are ranking these funds based on 3-year returns. A low Consistent Return metric such as that exhibited by Sentinel, Ruffer and M&G suggests that there have been higher levels of shorter-term volatility in these funds.

It is worth noting that Liontrust Sustainable Future Absolute Growth 2 Acc has scored top marks across all four metrics (BMO Multi-Manager Investment Trust C Acc and LF Miton Worldwide Opportunities B Acc only fall one short). It is quite a feat to have achieved such strong scores across a five-year period.


Lipper delivers data on more than 265,000 collective investments in 61 countries. Find out more.

This material is provided for as market commentary and for educational purposes only and does not constitute investment research or advice. Refinitiv cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. Please consult with a qualified professional for financial advice. Past performance is no indicator of future performance.

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