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3 Multi-Asset Funds for the Core of Your Portfolio

ASK THE EXPERT: When building a portfolio, a low-volatility building block such as a multi-asset fund can be a good place to start

Emma Wall 3 September, 2014 | 10:00AM


Emma Wall: Hello and welcome to the Morningstar series 'Ask the Expert'. I'm Emma Wall and here with me today is Linsay McPhater Morningstar Analyst to talk about multi-asset funds.

Hello, Linsay.

Linsay McPhater: Hi, Emma.

Wall: So we are here today to talk about multi-asset portfolios and multi-asset funds. These funds are particularly good for core holding in a portfolio, aren’t they? Why is that?

McPhater: Absolutely. I think given the current environment and people's awareness of risk and there are also concerns over the bond market. People or investors want – they want diversification. They want something that will protect on the downside, but they want something that will also gain some capital growth for them in the long term. So that – and also gives diversification, they've got equities, they've got bonds and have also got some absolute return in there which also is providing something different within the funds.

Wall: Particularly for beginner investors, it's basically outsourcing the portfolio allocation, which can be the trickiest bit when investing.

McPhater: Absolutely, because when we look at funds and when we rate funds, we look at the managers which is key, and so yes you are sourcing to that manager. And so we believe in them and they are using a consistent and continued and a skillful approach. It's them you are investing your money with. Absolutely.

Wall: So perhaps you could give us one of these funds that would be good for a core holding in a portfolio.

McPhater: Sure. One I can think of is the AXA Framlington Managed Balanced fund. This is run by Richard Peirson. He has 25 years investment experience and he's actually been running this fund since 1994. So given his consistent and his skillful approach, we rate him very highly. The way he runs this fund is he does asset allocation. He then looks at the U.K. equities and when he is looking at them he is looking for the capital growth and he is looking for attractive valuations. But at the same time, he is offsetting the volatility with the fixed income portion of the portfolio and using cash.

So he's giving that broad array of diversification. But I think what makes this key is the simple approach and we like about this fund, and given the fact that there are many fund launches are becoming increasingly complex and difficult to understand – investors to understand, we like them. We rate that very highly.

Wall: So perhaps this is one of those ones that could be called a ‘steady eddie’.

McPhater: Absolutely. Yes, especially given he is a steady eddie investor he's been doing it for many years and he's seen various market cycles, up and down. He's managed to really hold on to his key portfolio without making those changes to the short term – to gain the short-term performance which we are favourable off.

Wall: And what about the second fund?

McPhater: So another fund I've got and that springs to mind is the Henderson Cautious Managed fund. This sits in the IME and 20% to 60% shares. It is managed by Chris Burvill who has managed it single-handedly since 2003, 2012 – and in 2012 he brought on two co-managers Jenna Barnard and John Pattullo to help with the fixed income expertise.

We view that as a positive development, given that plays to the strength and expertise of the fund. But what we like about Chris is he is very aware of his investor base, who are predominantly cautious and he very much plays to that and so the fund is stock charge as a plain vanilla and just U.K. bonds, U.K. equities and cash.

Wall: Between the three of them, they've got a lot of experience, haven’t they, because John and Jenna run about four fixed income portfolios? Their Strategic Bond fund does extremely well. It's very highly rated by us. So, between the three of them, they are really covering all the bases and you are getting that combined knowledge, aren't you?

McPhater: Absolutely. They are all – like you say they are all managers in their own single right that we rate very highly, but combined it just makes them even stronger as a team.

Wall: What's the third fund?

McPhater: Emma, another fund I can think of is Jupiter, actually Jupiter (Merlin) Growth portfolio. So this is slightly different than those two because it's an active fund of funds. But I think what call it a key and point to mention in this fund is the expertise and the skill of the management team which is run by John Chatfeild-Roberts, the group's CIO and together he has a close-knit team who have been working together some of them over 10 years. But what makes them more unique is an actively managed fund, but they are focusing on capital preservation as well as capital growth in order to gain that long-term performance for investors. And they've just shown through time that they have been able to make those timely allocation changes developing on what their views of the economy are at the time.

Wall: Well, John Chatfeild-Roberts is another one of those stalwart star fund managers. He's been at Jupiter for ever and ever. That Merlin suite is quite an impressive suite, isn't it? Because it has a fund for almost every risk profile but this one in particular you think is good for the core holding.

McPhater: Yes, we like it. Because it's giving that capital preservation, it is also giving that bit of growth as well which is what investors are looking for at the moment within their portfolios.

Wall: Linsay, thank you very much.

McPhater: Thank you.

Wall: This is Emma Wall from Morningstar. Thank you for watching.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
AXA Framlington Managed Balanced R Inc283.10 GBP0.07
Janus Henderson Cautious Mgd A Acc273.20 GBP0.33
Janus Henderson Strategic Bond I Acc360.00 GBP0.17
Jupiter Merlin Growth Portfolio Acc457.63 GBP-0.09

About Author

Emma Wall  is former Senior International Editor for Morningstar

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