Neptune Multi-Manager Income
Neptune Multi-Manager Income returned 14.8% annualised over the past three years. Part of that is due to an all equity mandate prior to July 2006, but its performance since the chan
ge has still been quite strong. Moreover, the fund—as we noted last week--held up well in the summer sell-off. However, one should not interpret this as any sort of defensive play. As of 31 August 2007, it held roughly 11% in funds focused on China, another 4.6% in offerings that focused on Russia or greater Russia, 6% in Japan funds, and another 5% in Asian-oriented vehicles. It is well diversified—with holdings ranging from hedge funds through gold and property, but it’s relatively aggressively positioned when compared other Cautious Managed offerings. Thus far, it has made those bets pay, and Robin Geffen—who sets the asset allocation--brings a wealth of experience to the table. It holds appeal, we would be leery of buying it as a cautious offering, particularly if you already have emerging-markets exposure elsewhere in your portfolio.
CF Midas Balanced Income has stayed near the top of the Cautious Managed pack, but has done so whilst keeping risk reasonably in check. The fund is wide ranging, spreading its bets across UK equities, non-UK equities, bonds, and alternatives investments in an effort to diversify against risk. Whilst there appears to be little restriction on the fund’s asset allocation, the fund has a reasonably low standard deviation of returns. At 1.46%, its TER is reasonable for the sector, although it does hit all sales and purchases with a dilution levy of 0.25%.
Jupiter Merlin Income
There’s not much about Jupiter Merlin Income that isn’t well known. It had nearly £1 billion in assets at 31 August, and for good reason. It has consistently delivered strong performance relative to its Cautious Managed peers without taking a lot of chances. Beyond the fund’s strong long-term performance, it has a steady experienced hand at the tiller in John Chatfeild-Roberts and incorporates core UK equity exposure with Asian and European Equities and straightforward fixed-interest exposure. It’s not nearly as wide ranging as the Neptune fund or some of the newer offering such as Sarasin GlobalSar IIID and SWIP Diversified Assets, but we think its experienced management and strong results make it worthy choice.
Whatever you think of the above funds, remember to keep costs firmly in mind. Many funds-of-funds layer a full 1.5% management fee on top of the fees charged by the underlying funds, and their TERs can easily be north of 2.5%--a lot to pay for a fund of any stripe (keep in mind that Fitzrovia TERs do not include the expenses of the underlying funds and so dramatically understate the cost of funds-of-funds).
A version of this article previously appeared in Investment Adviser, Financial Times Ltd.
