Caution advised: two thirds of cautious funds produce losses in 2015
Markets in 2015 have suffered intermittent bouts of turbulence and anxious speculation, with concerns over a potentially unstable result in the May General Election, the ongoing Greek debt crisis, slumping oil prices, China’s devaluation of the yuan and the prospect of rising interest rates in the UK and US. As a result, investors may have sought to reposition their portfolios, moving towards more cautious positions.
While the official ‘cautious’ fund classification was dropped by the Investment Association in 2011, FE Trustnet defines cautious funds as vehicles “designed to steer investors away from riskier parts of the market”.
The label applies to funds with low exposure to equities, and higher allocation to bonds – an asset which has traditionally had an inverse relationship with the stock market. However, while these funds aim for positive returns in ‘down’ markets, the figures indicate only 46 of the 150 funds deemed ‘cautious’ avoided losses (ie produced returns of 0 per cent or higher) so far this year, with 27 of these funds failing to exceed a 1 per cent return.
The five FE Crown rated Kames Ethical Cautious Managed fund (managed by Audrey Ryan and Iain Buckle) was the most successful this year, with a positive 3.96 per cent return overall this year-to-date. In second place is the SF Cautious fund with 3.72 per cent, in third the JPM Cautious Managed fund in third with 2.83 per cent.
The table below ranks the 19 cautious funds that produced a return exceeding 1 per cent this year so far.
|Kames – Ethical Cautious Managed A Acc||3.96|
|SF – Cautious TR||3.72|
|JPM – Cautious Managed A Acc||2.83|
|Barmac – The Castleton Growth Ret Inc TR||2.78|
|Jupiter – Distribution Acc||2.57|
|CF – Miton Cautious Multi Asset A GBP||2.49|
|Scottish Widows HIFML – Non Equity 1||2.40|
|Cornelian Asset Managers – SVS Cornelian Cautious E Acc||2.07|
|F&C – MM Lifestyle Foundation B Acc||1.72|
|Alliance Trust – Sustainable Future Cautious Managed 2||1.69|
|Zurich – Horizon Multi-Asset I Z Acc||1.63|
|Aberdeen – Diversified Growth Z Acc||1.56|
|F&C – MM Lifestyle Cautious A||1.37|
|CF KB – Tully Acc||1.3|
|Architas MA – Active Reserve A Acc||1.23|
|Elite – CAM Cautious Discretionary Portfolio A Acc||1.14|
|Margetts – Sentinel Defensive Portfolio A Acc||1.12|
|Omnis Investments Ltd – Omnis Multi-Manager Cautious A Acc||1.12|
|Scottish Widows HIFML – Defensive 1||1.09|
Source: FE Trustnet (data correct as of 16 September 2015)