The Nine Flexible Funds That Have Kept Investors Safest Over Five Years

Ben Seager-Scott, head of multi-asset funds at Tilney Group, likened the sector to "the freestyle category in swimming competitions, which means front crawl - the fastest stroke".

He said: "Often adventurous funds reside in the sector because they would be above the upper limit for the Mixed Investment 40-85% Shares category," he reasoned.

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However, he also said the sector, which houses a wide range of uncorrelated mandates, may also be holding lower-risk offerings with strong long-term track records.

Of course, ranking funds by quartile in a broad-based sector - such as IA Flexible Investment - is not without the caveat that all funds have very different risk and return profiles, as well as different performance aims.

However, the nine funds that have managed top-quartile Sharpe ratios and drawdowns relative to their peers have also achieved lower drawdowns, and significantly less volatility, than the equity-only MSCI World index. 

Moreover, they have all comfortably doubled the return of the average fund in the IA Mixed Investment 0-35% Shares sector (this sector is more specific in terms of the equity risk level it targets, so arguably serves as a more accurate performance benchmark) over five years.

1. LF Miton Worldwide Opportunities

LF Miton Worldwide Opportunities, which has been headed up by Nick Greenwood since 2003 and deputy-managed by Charlotte Cuthbertson since last year, came top on the list for both its Sharpe ratio and its low  maximum drawdown over five years.

The £554.4m fund currently has a portfolio of 56 investment trusts, with its largest holdings including the likes of Phoenix Spree, Dunedin Enterprise and Artemis Alpha trust. 

Over five years, the fund - which has no specified benchmark - has returned 52.5%.

2. Unicorn Mastertrust

Unicorn Mastertrust has achieved the highest five-year total return out of all funds on the list at 63.6%, while also coming in second place for it Sharpe ratio.

As to be expected given its higher return, however, it falls into the middle of the pack for its maximum drawdown of 9.3% (which is still comfortably lower than its average peer in the sector).

ike Nick Greenwood, manager Peter Walls - who has been at the fund's helm since 2008 - invests in a portfolio of investment trusts, including the likes of Alliance Trust, Aberforth Smaller Companies and Harbourvest Global Private Equity.

3. Capital Group Global Allocation

In third place for its Sharpe ratio is the £566m Capital Group Global Allocation fund, which follows closely behind Unicorn Mastertust for its five-year total return of 59.9%. It also has one of the lowest drawdowns on the list at 7.5%. The fund has a highly diversified portfolio of 245 holdings, which are a mix of equities and bonds. Its largest allocation is to US government bonds at 12.1%, followed by Japanese government bonds at 3.1% and shares in Microsoft at 2.3%. It has six portfolio managers at its helm.

4. Troy Spectrum

Troy Spectrum comes in joint third place for its Sharpe ratio, and has a maximum drawdown that is just 10bps higher than Capital Group's.

The £138m fund of funds, which has been headed up by Tom Yeowart since 2014, has a strong focus on capital preservation, with a 64% allocation to developed market equity funds, a 5% allocation to gold-related investments, a further 5% in alternatives and an 8% cash weighting.

It also has 7% in inflation protection-linked securities. Over five years, it has returned 54.7%.

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5. JPM Diversified Growth

Next up for its risk-adjusted returns is JPM Diversified Growth, which has been headed up by Katy Thorneycroft and Jonathan Cummings since 2013, and co-managed by Peter Malone since 2015.

The £80m fund, which has returned 47.8% over five years, aims for lower volatility than the MSCI World index, which it achieves through holding a diverse range of assets including global equities, government bonds, investment grade credit, private equities and high-yield credit.

It has one of the higher drawdowns on the list at 9.4%.

6. Newton Osprey

The £15.8m Newton Osprey fund, which is number six on the list for its risk-adjusted returns, invests mostly in equities but also holds fixed income securities, funds and cash.

It benchmarks its performance against both the FTSE All-Share and the MSCI AC World indices.

While it has underperformed the former by 15.4 percentage points, it has outperformed the latter by 24.3 percentage points with a total return of 58.6%. 

It has a maximum drawdown of 9.4% and has been managed by Robert Shelton since 2004.

7. AHFM Defined Returns

In seventh place is the £1.2bn AHFM Defined Returns fund, which has been managed by Tom May since 2013, and by co-managers Jim May and Russ Bubley since 2016.

The fund, which is up 42.6% over five years, aims to return between 7% and 8% per year over the medium to long term, and "should do so in anything but the bleakest of market conditions with no partial recovery".

It sets out to do this through a diversified portfolio of global equity indices, derivatives and government bonds, which are currently UK gilts.

8. Jupiter Merlin Growth Portfolio

The £1.8bn Jupiter Merlin Growth Portfolio - a fund of funds managed by John Chatfeild-Roberts, Algy Smith-Maxwell, Amanda Sillars and David Lewis - is in eighth place for its risk-adjusted returns, but has the highest maximum drawdown on the list at 9.5%.

The team has a five-year investment time horizon and a concentrated portfolio of 13 holdings, including Fundsmith Equity, Findlay Park American and TB Evenlode Income.

It has returned 50.6% in total return terms over five years.

9. ACPI Balanced UCITS

The final fund on the list is ACPI Balanced UCITS, which is up 47.1% over five years and has one of the lower drawdowns on the list at 7.2%.

The £135m fund, which has been headed up by Marcus Szemruk since 2008, invests in a combination of equities and bonds in a bid to achieve long-term, diversified returns.

It is also unafraid to hold cash, with a 14% allocation at present.