A lot’s happened in the last few months – a snap election in Japan, Trump announcing his next Federal Reserve Chair, the end of the longest US government shutdown in history, instability at the top of UK politics, attempts to purchase Greenland, and the ousting of the Venezuelan President.
There was even time to celebrate Christmas.
Despite all of this, many stock markets around the world hit new highs. As did the gold price.
Even so, it’s not all been smooth sailing. Investors continue to grapple with how, what and when artificial intelligence (AI) will impact profits of different companies in different sectors.
We’re looking at how different markets have performed and what it’s meant for mixed asset funds.
This article isn’t personal advice. If you’re not sure whether an investment is right for you, ask for financial advice. Past performance isn’t a guide to the future. Investments and any income they produce can fall as well as rise in value, so you could get back less than you invest.
How have stock markets performed?
Stock market returns (in sterling terms) over the three months to the end of January have been mixed. The MSCI All Country World index, which reflects performance of global stock markets, fell 0.32%*.
Globally there were quite different returns. The US stock market fell 2.98%. As the largest driver of global stock markets, this had a big impact on overall index returns. This was offset by most other regions. The UK led the way, rising 5.73%.
Three months isn’t a lot of time when considering performance and it’s not a surprise to see different returns from regions.
How have bond markets performed?
Most bond markets provided a positive return.
The high yield sector continued to perform well, as it has done for some time. Bond prices more broadly have been relatively stable, which means most bond returns have come from the income they pay. When this happens, high yield bonds tend to provide higher returns.
How have mixed asset and total return funds performed?
Funds with more invested in shares have seen better returns over the past five years than those that invest more in bonds.
Funds in the IA Flexible Investment and IA Mixed Investment 40-85% Shares sectors performed best over the period because they generally invested more in shares.
The best-performing mixed asset sector over the last 12 months was the IA Flexible Investment sector, which returned 10.50%*.
The IA Mixed Investment 0-35% Shares sector was weakest but still returned a decent 7.14%*. This is an attractive return for just a year, and the sector tends to hold up better when stock markets are volatile or falling. But typically it won’t perform as well as others when stock markets are strong due to the smaller amount invested in shares.
Annual percentage growth
31/01/2021 To 31/01/2022 | 31/01/2022 To 31/01/2023 | 31/01/2023 To 31/01/2024 | 31/01/2024 To 31/01/2025 | 31/01/2025 To 31/01/2026 | |
|---|---|---|---|---|---|
IA £ High Yield | 2.21% | -5.53% | 8.27% | 9.02% | 6.93% |
IA Flexible Investment | 6.21% | -1.27% | 3.90% | 13.21% | 10.50% |
IA Mixed Investment 0-35% Shares | 0.73% | -6.14% | 2.70% | 6.84% | 7.14% |
IA Mixed Investment 20-60% Shares | 4.45% | -4.00% | 3.27% | 9.16% | 9.18% |
IA Mixed Investment 40-85% Shares | 6.36% | -2.47% | 4.46% | 12.72% | 9.77% |
IA Targeted Absolute Return | 3.46% | 0.70% | 3.98% | 6.87% | 8.07% |
MSCI AC World | 16.38% | 0.77% | 11.43% | 24.28% | 10.83% |
FTSE All Share | 18.90% | 5.20% | 1.90% | 17.06% | 21.15% |
How have our Wealth Shortlist funds performed?
Our Wealth Shortlist funds have enjoyed a wide range of outcomes over the past 12 months. But with different approaches and objectives, we don’t expect them to perform in the same way.
Remember, a year is a short time to look at investment performance. Investments should be held for the long term – that’s at least five years.
Investing in these funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
For more detail on each fund, its charges and specific risks, please see the links to their factsheets and key investor information below.
Schroder Managed Balanced
Schroder Managed Balanced was the strongest-performing multi-asset Wealth Shortlist fund over the past 12 months. It returned 14.03%*, above its IA Mixed Investment 40-85% peer group average of 9.77%.
This is a 'fund of funds', meaning the managers primarily invest in funds run by other talented Schroders fund managers, although they can also invest outside of the Schroders range where necessary. Collectively those managers invest in hundreds of different companies and bonds. This means the portfolio offers plenty of diversification.
Over the 12 months to the end of December, shares added the most to performance. With the amount invested in shares, it’s expected this will have the biggest impact on overall fund performance.
A particular highlight was investments in value style funds, both in the UK and globally. Emerging market shares also performed well. One area that detracted from performance was an investment in UK quality companies, a topic we’ve talked about previously.
The manager can invest in emerging markets, high yield bonds and derivatives, all of which add risk if used.
Baillie Gifford Managed
Baillie Gifford Managed was the worst-performing Wealth Shortlist fund in the sector over the last 12 months, growing 3.45%.
The managers invest across six major investment areas: shares in the UK, North America, Europe, Asia, the emerging markets, and bonds. It provides investors with a lot of diversification in one fund.
Shares tend to make up more of the fund compared to peers in the same sector and investors can expect that to continue over the long term. The average amount invested in shares will be around 75%.
The fund also has a bias towards investing in companies that have potential for significant growth into the future. So, we expect the fund to be a more adventurous and volatile option than many of its peers.
While the fund performed positively over the last 12 months, performance struggled versus peers. Within the shares part of the fund, investments in US companies lost value overall and hurt performance. Much of this weakness was during the last six months. Shares from other regions did add value though, with investments in emerging markets and the UK being some of the best performers.
The managers can invest in emerging markets, high yield bonds and use derivatives, all of which add risk.
Annual percentage growth
31/01/2021 To 31/01/2022 | 31/01/2022 To 31/01/2023 | 31/01/2023 To 31/01/2024 | 31/01/2024 To 31/01/2025 | 31/01/2025 To 31/01/2026 | |
|---|---|---|---|---|---|
Schroder Managed Balanced | 6.15% | -2.55% | 3.01% | 11.85% | 14.03% |
Baillie Gifford Managed | -8.99% | -8.44% | 2.55% | 16.59% | 3.45% |
IA Mixed Investment 40-85% Shares | 6.36% | -2.47% | 4.46% | 12.72% | 9.77% |