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Big name managed portfolios struggle in tumultuous summer

John Chatfeild-Roberts of Jupiter
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Some of the largest multi-asset funds in the UK retail space have seen performance slump in recent months after they struggled to navigate a difficult summer.

Portfolios such as the £2.6bn Troy Trojan fund, alongside the £870m Miton Special Situations, £4.8bn Jupiter Merlin Income, £3.2bn Newton Managed and £2.9bn CF Ruffer Total Return funds have all fallen to the bottom of their respective sectors over the period.

Simultaneous dip

A simultaneous dip in bond and equity prices in May and June made things difficult for all multi-asset portfolios, and the high-profile names valued for their defensive qualities were not spared.

Although the FTSE 100 then rose 4% between 1 July and 30 September, benchmark 10-year US treasury yields only moved from 2.5% to 2.64% over the same period, suggesting uncertainty rather than overt bullishness dominated in Q3.

This suggests managers’ individual calls could have been at fault over the quarter. These include overweight positions in struggling emerging markets, higher cash positions, and exposure to a gold price which went into reverse when the Federal Reserve signalled a potential slowdown in QE.

At Troy, Trojan fund manager Sebastian Lyon acknowledged over the summer that 2013 may turn out to be the fund’s first down year in its 12-year history, but remains calm over the long-term impact.

“Short-term missed opportunities are a price we pay for dependable and sustainable wealth protection and growth over the long term,” he told investors last month.

Even the redoubtable Ruffer has suffered over the summer months. The boutique’s investment trust rose by 10% in the six months to 30 June, driven by its overweight to Japan, but this portfolio and the similarly-structured Ruffer Total Return fund have posted negative returns over both three and five months to the end of September.

Even the former managed sectors’ most popular multi-manager funds have not been able to withstand the sell-off.

Jupiter’s Merlin Income and Balanced funds, and the Miton Special Situations fund are among those to have suffered in recent months.

All the funds in question remain top decile on a five-year view, but the recent difficulties mean the portfolios are now only in line with sector averages over three years – with the exception of Jupiter Merlin Income which is still top-quartile over this timeframe.

Top performers

Juliet Schooling Latter, research director at Chelsea Financial Services, said she has observed a number of well-respected funds across a variety of sectors suffering in the past six months.

“The talk of the tapering of QE has initiated a bit of a rotation. For such a long time, there has been a focus on income and quality. That has been the mantra for most investors. But we have seen people suddenly taking a step back from those themes over the summer,” she said.

Ben Yearsley, head of investment research at Charles Stanley, said: “These are managers you would back over the cycle. If the trend carries on over the next six months, you would start getting concerned, but not yet.”

John Chatfeild-Roberts, head of Jupiter’s Merlin team, said the performance dip is the first his funds have suffered since 2006.

He pointed to an overweight in emerging markets, gold exposure, and lower-than-average UK exposure as themes which affected performance in recent months.

“Our focus is on delivering long-term absolute performance after fees for our clients, and it is important not to be swayed by short-term events,” the manager added.

Summer strugglers: How the big managed funds have fared

All data to 30 September. Source: Morningstar

Fund Sector Three month return (%)   Sector average (%)    Sector rank   Five month return (%)   Sector average (%) Sector rank  
 Troy Trojan  Flexible Investment  -0.69  3.04  123/131  -5.72 1.05  126/130
 CF Miton Special Situations  Flexible Investment  -1.2  3.04  124/131  -1.47  1.05  109/130
 CF Ruffer Total Return  Mixed Investment 20%-60% Shares  -0.23  2.37  143/144  -2.45  -0.25 124/144
 Jupiter Merlin Income  Mixed Investment 20%-60% Shares  0.64  2.37  134/144  -3.15  -0.25  135/144
 Jupiter Merlin Balanced  Mixed Investment 40%-85% Shares  1.16  3.13  126/138  -1.64 1.27 132/138
 
 Newton Balanced Managed  Mixed Investment 40%-85% Shares 1.61  3.13  119/138  -1.26  1.27

130/138

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