David Jane and Anthony Rayner, managers of the CF Miton Defensive Multi Asset Fund, invest across a range of asset classes including shares, bonds and cash. They seek to shelter capital and limit volatility, while providing investors with returns modestly above inflation over five-year periods.
David Jane took over management of the fund in June last year, and was joined by co-manager Anthony Rayner in December. They have since restructured the portfolio. Most visibly, the fund has changed name from the CF Miton Strategic Portfolio and has been moved from the IA Flexible Investment sector to the IA Mixed Investment 0-35% Shares sector. This means a maximum of 35% of the fund may be invested in shares and a minimum of 45% must be held in bonds and/or cash.
A further feature of the restructure has been a change from the multi-manager approach (i.e. investing in other funds) implemented by their predecessor, to a directly-invested approach. A large part of the fund has been shifted into direct holdings; however, they will continue to invest in funds when they wish to gain access to specialist areas, such as higher-risk UK smaller companies, which demand extensive research.
David Jane and Anthony Rayner remain committed to sheltering investors from big falls in the value of the fund. They keep a tight rein on portfolio risk, ensuring they do not hold too many investments which share the same characteristics and are therefore likely to be closely correlated. In doing so, they hope to position the portfolio to limit risk in almost any economic climate. However, like all stock market investments the fund will fall as well as rise in value, so investors could get back less than they invest.
Source: Miton, 29/5/15
The managers' trading strategy further illustrates their attitude to risk management. When they believe trends are beginning to emerge, they will not act impulsively to enter or exit a market. Rather they will wait for data to confirm their suspicions before taking action. For example, while they are currently monitoring the risk of contagion among weaker European economies on the back of the Greek debt crisis, they will not trade before the evidence supports their hypothesis.
Over the past year, activity within the equity component of the fund has been focused primarily on the UK and Japan. Japanese holdings have contributed positively to the fund's performance over the last 12 months; however, the managers have taken some profits recently in order to reduce the fund's growing exposure to this region. In the UK, they have added to a range of domestic consumer-focused firms because they expect a pick-up in consumer spending on the back of lower oil prices and reduced unemployment.
Elsewhere, the managers are cautious in their outlook for bonds given the prospect for interest rate rises in the US and UK. They also view some areas of the bond market as expensive, based on current valuations. As such, they have been reducing government bond exposure and buying corporate bonds where they believe value still exists. Additionally, they have been moving into bonds which mature sooner rather than later, as these are less vulnerable to interest rate hikes.
Our view on this fund
Since David Jane took over management in June 2014, the fund has returned 6.9%, comfortably outperforming the sector return of 3.6% over the same period*. However, please remember past performance is not a guide to future returns and this is a relatively short period of performance.
|Annual percentage growth|
| Aug 10 -
| Aug 11 -
| Aug 12 -
| Aug 13 -
| Aug 14 -
|CF Miton Defensive Multi Asset Fund||7.53%||1.56%||5.41%||-5.25%||6.42%|
|IA Mixed Investment 0-35% Shares||6.33%||3.39%||6.05%||2.33%||4.19%|
Past performance is not a guide to the future.
Source: Lipper IM to 3 August 2015. * Data run from 9 June 2014 to 3 August 2015
It is encouraging to see David Jane and Anthony Rayner's tenure as managers get off to a good start. They share a pragmatic approach to investing which we think could stand investors in good stead over the long term. That said, we would prefer to monitor their performance over a prolonged period before considering the fund for inclusion on the Wealth 150 list of our favourite funds for new investment across the major sectors