FUND FOCUS MANAGED CAUTIOUS: Best performer YTD:Irish Life Diversified Assets +8.7% Worst performer YTD: Harvest Global AM Harvest New Ireland Protected -0.6%
Sometimes it pays not to take risks. In the current volatile environment, managed cautious funds are offering investors decent returns, with their diverse asset mix offering a hedge against fluctuations in particular asset classes.
According to MoneyMate, so far in the year to October 8th, Irish managed cautious funds have returned 4.4 per cent on average, or 6.7 per cent over the previous 12 months.
Top of the league table is Irish Life’s Diversified Assets fund, which is up by 8.7 per cent so far this year, or 13.2 per cent over the previous 12 months.
The fund aims to give about three-quarters of the return potential of a typical managed fund but with about half the level of potential risk, by balancing its mix of assets among commercial property, shares, bonds and commodities.
According to Stephen Cass, investment analyst with Irish Life, the fund currently has about one-third invested in equities (10 per cent US, 10 per cent Europe and 10 per cent Ireland/UK/rest of the world); one-third in bonds, primarily government bonds; and one-third split evenly between the alternative assets of commodities and property.
Despite equity markets remaining largely flat, the fund is performing particularly well in the current environment.
This is due to the boost it is getting from commodities, which are very strong at present, and UK property, which is up by about 15 per cent in the year to date, says Mr Cass.
Looking ahead, however, he expects the UK property market to make less of an impact on the fund’s returns, with the market having already factored in most of its gains.
With the outlook for equities remaining uncertain – “It’s difficult to see where they’re going to go on a long-term basis”, he says – a resurging European property market is expected to provide the gains.
Worst of the managed cautious bunch is Harvest Global Asset Management’s Harvest New Ireland Protected fund, which is underwritten by New Ireland.
Its asset exposure depends on the investment outlook but has a maximum equity exposure of 60 per cent.
It has lost 0.6 per cent so far this year, or 0.7 per cent in the 12 months to October 8th.
