Focus on global equities boosts Omam fund returns

The £119.7m fettered fund has scaled the heights of the Investment Management Association’s Mixed Investment 40-85 per cent share sector and has achieved a five-star Morningstar rating for how well it has balanced risk and reward relative to its peers.

This performance, masterminded by fund manager Stewart Cowley, has outstripped the average three-year return of its sector peers, at 16.24 per cent (all figures calculated bid-to-bid, net income reinvested).

It has a diverse remit to achieve long-term capital growth through actively managing a variety of asset classes across all possible regions. While the portfolio favours global equities, with its largest stake in the UK at 29.2 per cent, cash is the second largest asset class allocation at 14.4 per cent, followed by US equities at 14 per cent.

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The portfolio has an underweight to the global benchmark in US equities, although fixed income specialist Mr Cowley has a strong conviction in one particular US equity fund. The portfolio’s largest single fund holding is Old Mutual North American Equity fund at 13.93 per cent. This invests in a wide range of US stocks, with its largest holding – telecommunications firm AT&T – accounting for just 1.76 per cent of the overall portfolio.

The Old Mutual Managed portfolio has a total expense ratio of 1.66 per cent, an AMC of 0.75 per cent and an initial fee of 4 per cent. Investors can put at least £1000 into the fund initially, followed by a minimum of £500 in additional investments and £50 in monthly savings, all of which is permitted through an Isa.

A seemingly similar strategy has not worked as well for the £44.98m Schroder Multi Manager Strategic Balanced, where its return of 9.48 per cent has seen it slump to 123rd place in the IMA sector.

The fund managers Rob Hall and Ian Cunningham have also invested primarily in equities, with a 30.3 per cent allocation to the UK, 14.8 per cent allocation to Europe (excluding UK) and 11.7 per cent to the US, according to the latest factsheet. It has just 5.2 per cent in money market funds.

The portfolio, which is unfettered, has invested 8.1 per cent into boutique asset manager Majedie’s UK Equity Fund as its largest single fund holding and three of its top-five fund holdings are in the UK.

The Schroder fund has a TER of 2.2 per cent, an AMC of 1.5 per cent and no initial charge. The minimum investment is £1000, which can be followed by additional minimum investments of £500. The portfolio is Isa complaint.

Adviser analysis

Ben Wills, head of research for Bristol-based Whitechurch Securities, said: “TERs may have some effect on the performance of the Omam fund but it really has gained traction.

Just a couple of years ago, it was £85m in size and has grown a fair bit. Having Mr Cowley run it is interesting. He is renowned for his bond fund expertise so it is unusual for him to be running equities as well.

I note he has ramped up the equity portion of the portfolio and, given that he is clued up about global fixed interest markets, he knows when to focus on them and when to switch out.