Margetts punches above its weight

The £44.64m fund is punching above its weight in the Investment Management Association’s 20 to 60 per cent share sector, coming in 25th place and beating the average return of 20.02 per cent seen among its peers.

Managed by Matthew Jealous since 2007, the fund aims to have a broad but conservative mix of assets anchored in the UK and Europe.

The current geographical and asset makeup of the fund stays true to the manager’s objective, with 53.47 per cent of the fund invested in equities and 30.63 per cent in bonds. Exposure to the UK is at 62.58 per cent, while 15.91 per cent of the fund’s investments are allocated to Europe.

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The top five holdings also show a strong inclination for income funds. The FP Brown Shipley Sterling Bond, the top holding at 7.52 per cent, seeks high-income opportunities from corporate bonds issued by the likes of Nationwide and Coventry Building Societies, as well as Network Rail Infrastructure and the Paragon Group of Companies.

The Margetts fund has a total expense ratio of 2.31 per cent and an AMC of 1.5 per cent. The fund allows an initial investment of at least £1,000, with additional minimum sums of £100 permitted thereafter. It can also be accessed through an Isa.

The Thesis Optima Multi Asset Strategy fund, however, languishes near the bottom of the same sector, currently sitting in 113th place.

The much smaller £2.85m portfolio has only managed three-year returns of 3.47 per cent under the stewardship of Edward Fane, who has been at the helm since 2011.

Aiming to achieve real returns above the Bank of England base rate and inflation, the portfolio has also targeted lower volatility by moving away from a traditional equity-heavy portfolio. This is reflected in its hefty bond allocation, worth 32.97 per cent, compared to its equity investment of 41.7 per cent.

The UK is also the main focal point for the fund, with domestic exposure worth 63.53 per cent. The US is the only other region with a notable presence in the portfolio, at 17.77 per cent.

The fund is one of the most expensive in its sector, with a TER of 2.66 per cent and an AMC of 0.75 per cent. It has a minimum investment level of £1,000 and an additional investment level of at least £100, but it is not accessible through an Isa.

Adviser view

Darius McDermott, managing director of Chelsea Financial Services, said: “The Margett’s fund is at the lower end of the risk scale. Its current positioning is around a third in fixed income, 12 per cent in cash and money market funds, and the rest in equity income funds (mainly UK). Given this allocation, it is a little surprising that the yield is less than 3 per cent. That said, steady and consistent performance, while always being around the average, means that cumulatively, the fund has done nicely for investors over time.

“Conversely, the thesis portfolio made it onto our RedZone last time round as performance has been underwhelming. The aim of the fund is to produce real total returns in excess of the Bank of England base rate plus inflation by investing in different assets, with less than equity volatility. It has done that most years, but has lost considerable amounts (far in excess of the sector average) in falling markets and at a cost of more than 2.5 per cent a year, which I think is too much.”