Diversification works for Premier MA fund
Strong asset class diversification has helped the Premier Multi-Asset Monthly Income Fund outclass its sector average, returning 32.3 per cent over three years, FE data has shown.
The objective of the £412.6m portfolio, a top five player in the Investment Association Mixed Investment 20-60 per cent shares sector, is to provide a high level of income.
Fund manager David Hambidge and his team of three aim to have between 20 and 60 per cent invested in equities, and at least 30 per cent in fixed income and/or cash. A good share of the asset allocation is held in commercial property and alternatives, covering the world’s investment markets.
Income is paid monthly, in the form of a dividend per share. The portfolio’s historic yield is 4.5 per cent a year.
The portfolio has a 26.4 per cent UK equity bias. Corporate fixed interest is the next largest holding, at 18.1 per cent, closely followed by 17.1 per cent in property.
Its global stance sees a 14.1 per cent exposure to international equities and 13.6 per cent in global fixed interest. The remaining allocation is a 4.1 per cent exposure to alternatives, 2.3 per cent in money markets and 1.3 per cent in convertibles.
Top holdings are the £173m Franklin UK Equity Income, at 5 per cent; the £1.2bn TwentyFour Dynamic Bond, at 4.9 per cent; and £398m Fidelity Enhanced Income, at 4.6 per cent; according to its factsheet.
The minimum investment is £1,000, and the ongoing charge is 2.17 per cent.
The Fidelity Multi Asset Strategic Fund has returned 18.5 per cent in the past three years, placing it 64th in the sector, according to FE, with a large fixed-interest allocation.
The £605m portfolio has 70 per cent of its allocation in the UK and US, with UK fixed-interest its largest holding, at 33.2 per cent. Global fixed income makes up 4.3 per cent.
The fund management team of three aim to provide long-term growth through exposure to bonds, equities, commodities, property and cash, principally in funds managed and operated by Fidelity but also outside the fund’s main geographies, market sectors, industries or asset classes.
The portfolio can invest in bonds issued by governments, companies and other bodies and can use derivatives including more complex instruments or strategies to achieve its objectives, which may result in leverage.
It has a 16.1 per cent exposure to UK equities and 11 per cent in US equities. Other equity holdings are in Europe and Japan, and other exposures are in commodities and property.
Top holdings are the UK Aggregate Bond Fund, at 20.4 per cent; the £304.3m Fidelity Gross Accumulating Cash Fund, at 12.38 per cent; and US Dollar Fund, at 8.7 per cent.
The minimum investment is £1,000, and the ongoing charge is 1.58% per cent.
| Premier Multi-Asset Monthly Income Fund | Fidelity Multi Asset Strategic Fund |
| TOP HOLDINGS | TOP HOLDINGS |
| Franklin UK Equity Income 5% | UK Aggregate Bond Fund 20.4% |
| TwentyFour Dynamic Bond 4.9% | Fidelity Gross Accumulating Cash Fund 12.38% |
| Fidelity Enhanced Income 4.6% | US Dollar Fund 8.7% |
| Ignis Argonaut European Income Fund 4% | UK 4.25% Gilt Fund 8.2% |
| Charlemagne EM Dividend 3.9% | Fidelity UK Select Fund 6.1% |
Adviser view
Darius McDermott, managing director of London-based Chelsea Financial Services, said: “I really like the Premier Multi Asset Monthly Income Fund. It’s unfettered, and a true multi-asset, multi-manager, multi-structure actively-managed portfolio. The team, led by David Hambidge, aim to provide equity-like returns with less volatility, while providing a good monthly income – currently 4.5 per cent. And they have done just that consistently. The team’s focus on the fund’s risk/return profile has been one of the key drivers of their success in this competitive sector in the multi-manager universe. They also like to buy assets at value and are prepared to be patient for that value to be delivered. They have about 30 per cent in bonds, 40 per cent in equities and 17 per cent in property.
“The Fidelity Multi Asset Strategic Fund is the flagship fund in the Fidelity range, and invests mainly in Fidelity funds and index funds. It did extremely well in the first few years after launch, benefiting from the then managers’ process of ‘now-casting’ – looking at data in the present and making asset allocation decisions, rather than trying to forecast. It rather went off the boil about three to four years ago and performance dipped enough for it to appear in our RedZone on a couple of occasions. It has a change of manager at the start of this year when Trevor Greetham left Fidelity. It’s now run by three co-managers and very defensively positioned at the moment with about 40 per cent in bonds and 20 per cent in cash and cash alternatives. There is an income version of the funds in the range, if investors are looking for something similar to the Premier fund, but it is in the more cautious Mixed Investments 0-35 per cent shares sector, and the yield is lower at 3 per cent.”
