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Funds in the UK’s Balanced Managed sector, as the name suggests, are supposed to be not too cautious nor too adventurous, but somewhere in between. In terms of overall performance, the sector as a whole has behaved as one might expect, producing returns midway between its Cautious and Active sister-sectors.

Over one year, it has fallen 8.7 per cent on a cumulative basis, according to Morningstar, while the average funds in Cautious and Active Managed fell 6.4 per cent and 10.4 per cent, respectively.

The investment case for balanced funds strengthens further on a three-year view: they have returned 12.6 per cent, on average, cumulatively – more than double the returns from funds in the Cautious sector and only 2.1 per cent less than funds in the Active sector.

But Balanced funds can include a variety of asset classes, as well as exposure to non-UK equities – a broad remit that has attracted a steady flow of new entrants, taking the total number to 141 funds.

For example, one of the top performers – the £110.1m CF Ruffer European fund – has taken the ultra-defensive stance of being 59 per cent invested in cash. In spite – or perhaps because – of this, the fund is one of only seven to achieve positive performance over one year, returning 8.4 per cent. While it lost 2.7 per cent over three months, it still ranked 5th out of 141 funds.

Similarly, the top quartile £47.1m CF Miton Strategic Portfolio has 37 per cent in cash. It returned 5.3 per cent over one year and fell 2.3 per cent over three months, to be ranked 4th in the sector overall.

For investors looking for funds that are closer to being fully invested – to justify the management fees – the choice is between funds that are still biased to equities and those with a greater exposure to fixed income.

According to Morningstar, funds with a marked overweight in equities have tended towards the top half of the sector over the past year. For example, the £77.1m Credit Suisse Managed Assets fund, which has 108 of its 137 holdings in stocks, ranked in the top quartile over that period.

Overall, performance has been steady, if at times uninspiring, making the sector a good option for those who want a higher exposure to equities than is generally found in the Cautious Managed sector.