Standard Life Investment’s £27bn Gars fund has seen a reversal of its performance, nudging up slightly in the third quarter, after an 18-month spell in sub-zero territory.
Figures show the fund returned 0.5 per cent for the three months to the end of September, compared to a loss of 3.2 per cent between March and June.
There were 18 strategies which performed positively over this period, outweighing the 14 strategies which made a loss.
This comes as Fundhouse criticised the fund’s structure, saying the bulk of its pay-offs came from a relatively small number of the strategies within the vehicle.
An analyst from research provider MPI also shed a light on why the performance of the Gars fund had deteriorated since 2015, blaming “strategic bets”.
Standard Life investment director, Adam Rudd, said the fund had been given a boost by its exposure to European equities, investment grade corporate bonds, US investment grade credit, and high yield credit.
The fund suffered, however, from its allocation to large versus small cap equity in the US, which lost 0.9 per cent, long US dollar versus Korean won, which lost 0.3 per cent, and US relative interest rates, which lost 0.2 per cent.
Its newly-added exposure to global real estate investment trusts (Reits) also took a hit, which Mr Rudd blamed on the sector’s sensitivity to shifts in interest rates.
“We have certainly seen that as bond yields have moved higher, then Reits have performed poorly in the short-term, but we very confident about the direction of Reits over our three-year timeframe.”
During the three months, four new strategies were added to the fund, including a US dollar versus sterling, a UK versus German interest rate, a global Reits position, and a Norwegian Krone versus Australian dollar position.
It also closed its US relative interest rate position, replacing it with it an Australian versus US interest rates strategy.
Mr Rudd pointed out that the strategies align with global themes, such as the continuing demand for yield, uncertainty over the rate of growth, and the rise in the political risk-premium.