Some of the Mixed Investment sectors’ poorest performers are attempting to turn around their fortunes after posting losses in the three years to March 22.
Only three funds across the four IMA Mixed Investment sectors lost money in that period, according to FE Analytics: JPMorgan Asset Management’s Cautious Total Return fund, Barmac Asset Management’s Castleton Growth fund, and the Premier Enterprise fund.
The JPMorgan fund suffered the biggest loss, shedding 5.3 per cent. The fund has suffered huge outflows in this period, which has seen it fall to £318m from £753m in March 2010.
Managers Talib Sheikh, Gareth Whitcomb and James Elliot are now drawing on JPMAM’s specialist staff from the equity and fixed income desks to improve their stock selection and increase the range of assets open to the managers. They have already seen performance improve in the short term.
Rob Worthington, a client portfolio manager on JPMAM’s multi-asset team, acknowledges that the fund has underperformed, saying the “shorter and sharper” economic cycles have “challenged” the team’s investment process.
While the fund has dramatically increased and diversified its equity holdings, from roughly 20 stocks to between 100 and 120, Mr Worthington insists this does not mean the fund’s risk profile has changed. “We don’t want to add risk in to chase performance,” he says. “We will not significantly alter the risk profile of the fund and we remain committed to the ‘cash plus’ returns strategy.”
Meanwhile, JPMorgan Asset Management’s £8.5m Balanced Total Return fund also ranked in the 10 worst-performers overall within the Mixed Investment sectors, but, while its three-year return of 6.9 per cent ranked it bottom of the IMA Mixed Investment 40-85% Shares sector, the fund outperformed its one-month Libor benchmark.
Barmac Asset Management’s £8.2m Castleton Growth fund has lost 4.1 per cent in the three-year period, but has also made changes to its process. From its launch in July 2007 to the bottom of the equity markets in March 2009, manager Andy McCarthy led the portfolio to gains of 5.3 per cent, the second-best performance in what was the IMA Cautious Managed sector.
But following the financial crisis, chief executive Andrew Bartles says the fund was positioned “too cautiously” for the rebound in stock markets, investing heavily in US government debt in anticipation of market falls which did not transpire.
In response to the fund’s declining performance, Mr McCarthy revised his strategy to “desensitise” its indicators, which has helped the fund drastically improve its performance in recent months. A six-month gain of 13.7 per cent was the second-best in the IMA Mixed Investment 40-85% Shares sector.
Mr Bartles explains: “At the time, we didn’t think the crisis was over and [we] were overly cautious. We were not convinced by European banks or the ECB’s strategy at the time, but we were caught out on the rebound because we felt politicians were applying sticking plasters to problems.”
