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Equity/bond split drives managed fund returns

GLOBAL – The allocation of investment between bonds and equities has become the driving force behind the performance of managed funds this year, as compared to regional asset allocation and equity exposure in 2000, says a report by Standard & Poor’s (S&P).

Volatile and generally depressed market conditions are the reasons for the change, which in turn have led to greater importance and emphasis being placed on value orientated equity sectors rather than growth, suggests S&P.

S&P’s research finds that the median fund performances for its eight investment sub-sectors, which each reflect a different make-up of funds, all showed a decline in the year to September 1.

This year the cautious managed sector (limited to a maximum 60% in equity and a pan-European bias) recorded the best relative performance with the median fund dipping by 0.9% in sterling terms. The active managed median tumbled by 19.4%.

S&P says that sliding equity markets are to blame for the falls.

However, S&P found during many of its interviews with fund managers whilst compiling the research that there had been a switch to a somewhat more positive stance, with some managers moving from defensives to higher growth stocks.

The report covers both types of managed (funds of funds) funds, those invested in internal group funds and those invested with external investment houses. These account for almost half of the funds covered, the balance being managed funds invested directly into individual securities.

A further 39 managed funds achieved AA rated status over the last year, with eight funds obtaining an improved rating on their status last year.

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