Featured Fund – Newton Phoenix Multi-Asset

by admin on 20 August 2008

Fund Legal Name:  Newton Phoenix Multi-Asset FundManager:  Phil Collins, BNY Mellon Asset Management

Initial Charge:  4.00%

AMC:  1.50%

Launch Date:  11 April 2003

IMA Sector:  Cautious Managed

Performance YTD:  -4.72%

Annualised Standard Deviation:  6.34%

Annualised Sharpe Ratio:  0.09

Aim:  The fund aims to achieve long-term capital growth in excess of benchmark cash returns from a balanced portfolio diversified across a range of asset classes.

Commentary:  The fund pursues a diversified asset approach in order to deliver returns in excess of cash but with bond-like levels of volatility.  The fund targets a return of at least 2% above cash over a rolling 3-year period.  It invests across a broad range of asset classes including commodities, hedge funds, private equity, property, equities, bonds and cash.

The Newton Multi-Asset Fund combines a broad spread of differently correlated asset classes in such as way as to maximise returns while minimising volatility.  While the fund manager is free to adjust the Fund’s allocation in response to market conditions, in practice such changes are unlikely to be either frequent or dramatic, as Newton does not attempt to forecast the next ‘fashionable’ asset class or sector.  This approach tends to limit the transaction costs associated with frequent trading while maintaining consistent, low volatile returns throughout the investment cycle.

Funds that offer exposure to multiple asset classes continue to prove popular with investors looking for a safe haven in present market conditions.  Such ‘Cautious Managed’ funds range from those offering exposure to equity, fixed interest and cash to funds providing exposure to alternative assets in addition to exposure to the traditional asset classes. Some of these ‘Cautious Managed’ funds have delivered disappointing returns in the past year.

Although the Newton Phoenix Multi-Asset Fund has been hit by recent losses (-4.72% YTD), it’s losses are a fraction of those suffered by rivals such as Investec Cautious Managed (-6.35% YTD), AXA Cautious Managed (-8.08% YTD) and New Star Managed Distribution (-13.93% YTD).  Therefore, Newton’s asset allocation strategy and multi-asset approach, although currently falling short of ‘cash plus returns’, continues to shield investors from substantial losses during the current market turmoil.

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