Four funds have been awarded five FE Crowns, in an impressive performance considering each only just had sufficient investment history to make them eligible for a Crown Rating.
The AllianceBernstein Managed Volatility Equities, Legg Mason Martin Currie Diversified Income, T. Rowe Price Dynamic Global Bond and Zurich Investments Emerging Markets Equity funds were all awarded five FE Crowns. They each only just had the three years’ history needed at 31 July, 2017 to qualify for a rating.
All four funds’ returns outperformed their sectors’ averages over the three years, some by significant margins. AllianceBernstein’s Managed Volatility Equities fund was particularly impressive, with its annualised returns over the three years to 31 October, 2017 beating the Equity – Australia sector average for that period by 5.6 per cent.
AllianceBernstein’s director of marketing communications, Roger Hogan said that the fund’s early success was partially driven by innovations and refinements to investing approaches.
The innovations included focusing on quality low-volatility stocks with reasonable valuations, total returns rather than market benchmarks, and stocks with characteristics that work well in a down market.
Hogan said that the fund was driven by an investment philosophy that managed downside risk while participating heavily in market recoveries, which was developed to help find solutions to challenges faced by people in retirement.
Legg Mason, who was this year’s Money Management Fund Manager of the Year, also pointed to an investment philosophy underscored by serving the needs of retirees as key to its Diversified Income fund’s success.
“By targeting a ‘sustainable income for life’ we were able to deal with shortfalls traditional balanced funds have … Along time we have delivered a high and growing income alongside meaningful capital growth,” Legg Mason managing director, Andy Sowerby said.
Concentrating on mitigating risk prioritising dividends and credits also helped the fund achieve early success.
“Many of the equity assets in the Fund also help provide protection against future inflation, and the equities held are dominated by low-risk names that offer high dividends and valuable franking credits,” Sowerby said.
Zurich, in contrast, credited their Emerging Markets Equity fund’s success to its focus on emerging market companies that pay attractive and sustainable dividends.
Zurich senior investment strategist, Patrick Noble believed that this tactic offers both the growth potential of emerging markets and lower volatility. He said that while this fund is young, this strategy had been proven to return strong performances before.
The State Street Global Equity fund also recorded a strong FE Crown Rating, being the only fund to receive four crowns with just three years’ history.
