Balanced Managed funds riskier than advisers think, research suggests

Balanced Managed funds have an average risk rating of eight or nine out of 10, which is far higher than the estimates of most advisers, according to Skandia research.

The research compares a survey of 1,300 advisers with volatility data over the past three years using the firm’s new managed fund analyser tool and Skandia says there is a mismatch in actual versus perceived risk.

“A lot of advisers think that managed funds are actually a lot more managed than they are”

Mark Waters

Balanced Managed funds were rated in a risk category of between four and six out of 10 by 87% of advisers.

But the analyser tool suggests that most funds in the sector have a rating of eight or nine and 40 funds have the top rating of 10.

Some 81% of advisers risk-rated Cautious Managed funds as four or below, yet analysis suggests the most common rating is seven. (article continues below)

Graham Bentley, the UK head of investment marketing at Skandia, says: “Managed funds rarely perform in line with expectations due to the wide range of risk and returns that they offer.”

Mark Waters, an investment manager at Skerritt Consultants, says: “A lot of advisers think that managed funds are actually a lot more managed than they are.”