- The managers have kept the shares and bond mix broadly the same for several years
- They think global growth could slow, but still won’t be changing the fund much
- The fund’s grown 31.9% since the managers took over at the end of 2015
We like fund managers who focus solely on what’s going on inside their fund. Jamie Hooper and Nick Hayes, managers of AXA Framlington Managed Balanced, do just that. They don’t try to predict how the market will react to the latest political or economic news. So while others make changes based on what’s happening with Brexit, or President Trump, they keep things much as they are.
They also differ from many others by not looking at companies in terms of the sector they’re in. Instead they look at ‘themes’ they believe offer good prospects. These include ageing populations, urbanisation, tech connectivity, industrial automation, and sustainable energy.
It makes sense to focus on companies in areas with lots of potential, but there are lots of things that determine a company’s performance. We feel the managers have yet to prove their emphasis on themes can be successful over the long term. There are similar funds available in this sector run by more experienced managers with better track records, in our view. That’s why the fund isn’t currently on the Wealth 150.
About the fund
Hooper and Hayes have a simple investment philosophy: invest in a mix of good quality companies and add some government bonds as an “insurance policy”. With this approach they think they can capture most of the gains when the stock market rises and reduce the negative impact of a market fall.
Roughly 80% of the portfolio is invested in shares with the balance in government bonds and cash. The majority of shares are in large companies. The five biggest investments are all top 10 FTSE 100 companies. With over 180 companies in the fund though, there’s plenty of diversification.
Bonds and cash are there to reduce the ups and downs of the fund’s performance. So while holding bonds and cash can hold back gains, they could reduce losses if markets tumble.
Roughly a third of the fund is invested in UK companies, and about half is in foreign shares or bonds. Some of the shares are in emerging markets, which are higher risk than more developed markets. The managers use derivatives to reduce the impact of foreign currency movements. The use of derivatives increases risk.
How's the fund performed?
Since Hooper took over as lead fund manager in November 2015 the fund has done slightly better than many other mixed asset funds. In that time it’s grown 31.9%* compared to 28.3% for the IA Mixed Investment 40-85% Shares benchmark. How the fund’s performed in the past doesn’t indicate how it’ll do in the future.
Manager tenure performance
|Annual percentage growth|
| Sep 13 -
| Sep 14 -
| Sep 15 -
| Sep 16 -
| Sep 17 -
|AXA Framlington Managed Balanced||6.2%||0.5%||17.2%||9.2%||6.5%|
|IA Mixed Investment 40-85% Shares||5.5%||0.3%||15.7%||9.4%||5.3%|
Past performance is not a guide to the future. Source: Lipper IM to 30/09/2018
The UK is currently one of the most unloved markets in the world. That’s down to lots of things including Brexit concerns, a fragile government and the lowest growth in the major G7 economies. An unloved market has pushed down valuations. The managers point out, however, that most of the earnings from companies listed on the UK stock market come from abroad. That’s why they see investing in UK companies as an attractively priced way to invest in the global economy.
The managers believe, however, we’re coming to the end of a business cycle, with slowing growth. They think government bonds could benefit from that and riskier assets, such as shares, could suffer. As they don’t try to guess when the market will next drop though, they’re unlikely to change the fund much, whatever happens. They feel the fund’s mix of bonds and shares is about right to achieve a good balance of long-term growth and some shelter when stock markets fall.