Fund of funds performance data

The top three funds of funds in the Investment Management Association\'s Cautious Managed sector over one year to July 7 remain unchanged from last month\'s rankings.

CF Miton Extra Income Portfolio leads the field with a 12-month return of 16.56%, according to Standard & Poor’s.

The fund, managed by Sam Liddle, was 42% invested in UK Equity Income funds at May 31, with 12% in emerging market bonds, 11% in UK gilts, 10% in UK corporate bonds and 25% in cash. The largest single holding was Neil Woodford’s Invesco Perpetual Income fund, at 9.2% of the portfolio, followed by Close Finsbury UK Gilt at 6.6%.

An advance of three places in the three-year rankings to seventh makes the Miton fund one of the biggest risers over the month, although its three-year return of 22.18% is fractionally below the sector average return (funds of funds only) of 22.77%. Over one year it also has the highest volatility in the sector, at 1.80% versus a sector average of 1.18%.

The second-placed fund over one year, Framlington Managed Distribution, is also top over three years after a rise of three places in the rankings. Last week Framlington announced that the fettered fund, managed by Richard Peirson, is to close on September 30 (see News, page 8). It says fettered funds, which invest only in funds managed in-house, have declined in popularity compared with unfettered funds, which can invest across the market.

The one-year return of 16.34% and the three-year return of 29.76% have been achieved from a portfolio that has as its largest holding George Luckraft’s Framlington Equity Income fund. Investors will not be able to switch into this fund, as it is closed to new investments, but they are being offered a free switch into Luckraft’s Managed Income fund. Framlington says this fund has a similar objective to Managed Distribution but invests directly in shares and bonds rather than in other funds.

In third place is the F&C Multi-Manager Distribution fund, managed by Richard Philbin, which has the second-lowest volatility in the sector, at 0.78.

The biggest movers in the one-year table are the Credit Suisse Premier Fund of Funds Portfolio Conservative, up four places to tenth, and the Henderson Independent Income Portfolio, down five places to 12th. The Credit Suisse fund, which invests in a mixture of income, growth and bond funds, was bought from Artemis earlier this year and is due to merge with the existing Credit Suisse Multi-Manager Cautious Managed fund of funds in the autumn.

The Henderson Independent Income Portfolio has slipped back only slightly since last month, with a 12-month return of 12.54% to July 7, down from 12.68% in the year to May 30. At June 1 it was 44% invested in UK equity funds, 20% in global bonds and 15% in UK bonds, with small allocations to America, Europe, Japan and Asia, and 6.4% in cash. Its biggest holdings were Thames River Global Bond at 10.5%, Invesco Perpetual Income at 9.8% and M&G European High Yield Bond at 9.5%.

In the three-year table the Insight Investment Wealth Builder High Income fund suffered the biggest fall, down four places to 11th of 13 funds with a return of 18.84%. Managed by Ana Munro and Patrick Armstrong, the fund has 39.3% of its assets in UK fixed income, 30.8% in UK equities, 14.3% in global fixed income and 15.3% in cash. Its largest holdings as at May 31 were Baring Directional Global Bond, New Star Higher Income and Aegon Extra Income.

The Framlington fund’s three-place rise over three years has pushed last month’s first-placed fund, Jupiter Merlin Income Portfolio, into second place. Managed by John Chatfeild Roberts and his team, the 286.67m fund was 52.7% invested in equities at May 31, with holdings including Artemis Income, Jupiter UK Growth and CF Morant Wright Japan. Bond holdings made up 22.5% of the portfolio, with nearly a quarter held in cash.

All the funds of funds in the Cautious Managed sector are showing good gains over both one and three years, with returns over one year ranging from 8.71% to 16.56% and three-year returns ranging from 14.52% to 29.76%. Legal & General manages the funds placed last over both periods.

The Cautious Managed sector is the smallest of the three managed fund sectors in terms of funds of funds, and is set to become smaller still following the closure of Framlington Managed Distribution and the merging of the two Credit Suisse funds.

Table shows percentage returns, volatility and fund size for funds of funds in the IMA Cautious Managed unit trust/Oeic sectors, bid-bid, net income reinvested, over one and three years to July 4, 2005.

Source: Standard & Poor’s