Best Performing
One of the best performing funds in the sector is the Investec Diversified Growth Fund earning a four star performance rating, with a three-year annualised performance of 9.76%. Despite the recent positive performance, Morningstar analysts only rate this fund as a Neutral.
Among diversified growth funds, Investec’s offering is one of the largest in the UK marketplace, with a lot of institutional money invested in it, and euro and US dollar SICAV versions as well as an Australian unit trust, says Randal Goldsmith.
The UK retail fund was restructured in April 2012. Important milestones since then include the appointment of Michael Spinks as manager in the first half of 2013 and switching from the Investment Association’s Mixed Assets 40-85% Shares sector to Specialist in the middle of 2015. With the appointment of Spinks, the transition from traditional multiasset to a more flexible, ideas-driven approach was given further emphasis, drawing on his experience as co-manager of the Schroder Diversified Growth fund.
Largest
Deutsche Invest I Multi Opportunities, with over €3 billion under management, was launched in June 2014, but Henning Potstada has been running the underlying strategy since January 2009 in an institutional fund. The fund is currently a Morningstar Prospect, a promising investment strategy that we believe may be worthy of greater investor attention but that is not yet covered by the Morningstar Manager Research team.
The Potstada is a senior team member of Deutsche AM’s Multi-Asset Total-Return Team, led by Klaus Kaldemorgen, whose expertise we hold in high regard. Deutsche Multi Opportunities is set up as a fund of fund, which means that it holds at least 51% of its assets in funds, mostly in-house products and ETFs. The process emphasises top-down allocation and risk management.
Tactical positions can use derivatives. The equity exposure is flexible and since launch it has ranged between 9% and 63%. As at the end of May 2017, net equity exposure was 29%, resulting from the team’s cautious stance towards the global equity markets. Historically, the portfolio has ranged between the value and blend section of the Morningstar Style Box. The European bias in comparison with the fund’s category peers, currently 58% exposure vs 41% on average, is also typical for the fund.
In the bond category, which makes up 47% of the portfolio, the manager favours corporate bonds, including 12.3% with ratings below investment grade. A further 6% is invested in emerging markets bonds.
Newest
Kames Global Diversified Income launched in April 2016 and is managed by Vincent McEntegart from Kames’ multi-asset team. McEntegart has 28 years of professional experience.
The fund’s objective is to provide its investors with an annual income distribution of 5% by allocating the fund’s assets into bonds, equities, listed property, specialist income and cash. The equity exposure is limited to a maximum of 80%. Its significant allocation to alternative investments with up to 30% of the portfolio sets the strategy apart from many competitors in the field.
This includes, besides property, a category called ‘specialist income’ that comprises infrastructure investments, aircraft leasing, renewable energy or other assets with government or regulatory backed revenue streams.
Therefore, the fund also invests in dedicated closed-end funds. As at the end of April 2017, bonds made up 33% of the portfolio, with the majority (20%) invested in the high yield segment, 26% in equities, followed by 18% in listed property, 16% in specialist income and 7% cash.
