Lincoln Balanced Mgd
The Lincoln Balanced Managed fund was launched in 1977 and has grown to a massive £1.67bn across its life and pension mandates. It claims to seek a balance between the need to preserve original capital and the need for growth and income. Investors would be forgiven for thinking that it had not lived up to its promises. The fund is a fettered fund of Lincoln's funds with the overall asset allocation determined by Goldman Sachs. The asset allocation should have been broadly favourable, with a lower fixed interest weighting and higher equity weighting than the remainder of the sector. But the fund's performance has been poor, losing investors around 10% of their capital over five years. This is largely because the performance of the underlying funds – which are managed by a range of different managers including Goldman Sachs and Citibank – has been disappointing. It continues to underperform the balanced managed sector. Our fund pickers suggest alternatives...
This Lincoln Balanced Managed fund claims that it balances the need to preserve original capital with income. Over five years this fund has not achieved this. Any fund that is only 17.3% invested in property and fixed interest cannot have the need to balance capital and income as its objective. It has fallen 35% at its worst and is still 10% down on five years ago. There are a lot of people in this fund with a lot of pension money. And its performance ignores the effect of other charges.
The balanced managed sector is down around 5% over the same period. But the Jupiter or Investment Manager Selection fund of funds teams would have produced very different returns over the same dates. I believe in the multi-manager concept, but I prefer unfettered managers. I have never really seen the point in fettered managers because very few houses are universally good. Fidelity is the only mainstream house that has really had the capability to do this.
I admire John Chatfeild-Roberts in this field. He is not swayed by what other people think and does what he can to make money. He uses his knowledge and skills. I want to pay for conviction. I also like the Personal Assets investment trust. Half the fund is the manager's own money.
The management of this fund is outsourced to Goldman Sachs. Although this is badged as benefiting from "outstanding fund management", the fund itself has been a consistent underperformer over most time periods. This is despite being overweight equities compared to bonds, while at a strategic asset allocation level, the fund had overweight positions in the strongly performing UK and Japan markets. The fund is restricted to Lincoln's own range of funds. I prefer those trusts that have the freedom to invest in the entire collective fund universe without being restricted to a company's own funds. No-one has an entire range of top-performing funds.
Origen's research and investment team constantly monitor our approved panels of collective funds, using a qualitative and quantitative investment process. The best ideas are represented in seven Origen Discretionary managed portfolios.
For those that do not wish to invest in a specialist portfolio or they do not have sufficient monies to invest in a range of funds, we recommend the Jupiter Merlin fund of funds range, managed by John Chatfield-Roberts. Underlying investment funds may be selected from across the whole market and are not restricted to Jupiter's own funds. This approach offers professionally managed exposure to equity and fixed interest markets and significant diversification in terms of stock specific and fund manager risk. The fund is managed by an experienced investment team who have retained their disciplined and proven investment process.
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There is nothing wrong with a fettered fund of funds as long as you have decent fund managers. M&G, for example, have one that has performed really well. Jupiter has its Global Managed fund where John Chatfeild-Robert does the asset allocation and gives a pool of money to each of the specialist managers. There is also a small cost advantage for fettered fund of funds over normal fund of funds. So there is not necessarily anything wrong with this, but if you have not got great managers, why would you bother? There are fewer fettered fund of funds now as normal fund of funds have moved more into the mainstream.
In this area we like the Framlington Managed Balanced fund. It is on our favoured funds list. It 's not a fund of funds, but like the Jupiter fund, pools of money are given to internal fund managers according to an overall asset allocation strategy. The Jupiter fund is higher risk, but also good. Of the Lincoln funds, we only use the Global Emerging Markets and Far East funds.
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