It’s been a busy few months for countries across the globe.
We’ve seen peace talks between Russia and Ukraine, similar ceasefire talks for Gaza, Kashmir being the centre of increased hostility between the first and fifth most populus countries in the world, and more recently the conflict between Israel and Iran. Yet tariffs are still at the top of most investors’ minds.
The tariff saga has caused a lot of market volatility. Some of it expected, some of it less so.
But, for those investors who take a multi-asset approach, they should take comfort that their investment journey through all this noise has been more stable than those purely at the whims of the stock market.
To illustrate this point, let’s look at performance over the three months to the end of May.
But before we do, let’s also remember that three months is a very short period of time. Investment decisions should be made with a multi-year time horizon in mind and that past performance isn’t a guide to future returns.
Over the three months to the end of May, global stock markets were down 4.12%. But bonds, illustrated by the IA Sterling Strategic Bond sector, were up 0.28%.
This meant that returns from multi-asset funds were somewhere in between, depending on how much they had invested in shares and bonds.
Here’s a look at which markets did best and worst over the quarter and the impact that’s had on 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. Investments and any income they produce can fall as well as rise in value, so you could get back less than you invest. Past performance isn’t a guide to the future.
How have stock markets performed?
Stock market returns over the three months to the end of May have been negative, but still quite varied.
The MSCI All Country World index, which reflects performance of global stock markets, fell 4.12%* over this period.
This was driven by the US tariff announcements.
The MSCI USA index is down 6.90% over the same period.
China also struggled, which is no surprise as it’s expected that they’ll bear the brunt of the tariffs imposed by the US.
Stock markets in Japan performed positively though, rising by 2.56%.
Europe and the UK also posted positive returns over the three months.
How have bonds performed?
Interest rate cuts, sticky inflation, the unknown impact of tariffs and other Trump polices have meant bond markets continue to provide plenty of short-term ups and downs.
The yield on UK 10-year government bonds (gilts) is an example of this.
At the end of February it was around 4.48%, it peaked at 4.81% in April, and fell to 4.44% on a couple of occasions. It’s around 4.53% at the time of writing.
A frustrating journey for bond investors, many of whom invest in bonds as they’re happy to accept a lower return compared to shares, on the expectation that the journey is smoother.
The bond yields available have meant that many bond funds have still provided positive returns overall.
For this reason, it isn’t a surprise to see the IA Sterling High Yield sector as the strongest performer over this short period. This has built on previous strong performance, meaning it remains the best performer over 12 months, having returned 8.53%.
Index-linked gilts have continued to lag other types of bonds, with losses of 5.03% over the three months, meaning 12-month returns were -8.26%.
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 this period because they generally invested more in shares.
This trend’s slightly different over the 12 months to the end of May, although overall returns across multi-asset sectors have been fairly similar.
The best-performing mixed asset sector over the last 12 months was the IA Mixed Investment 40-85% sector, which returned 5.33%*.
But the worst-performing sector was the IA Flexible sector. The average fund in this sector returned 4.87%*.
Performance of mixed asset and total return sectors over 12 months
May 20 – May 21 | May 21 – May 22 | May 22 – May 23 | May 23 – May 24 | May 24 – May 25 | |
|---|---|---|---|---|---|
IA £ High Yield | 14.48% | -5.46% | -0.43% | 10.75% | 8.53% |
IA Flexible Investment | 19.75% | -1.41% | -0.93% | 10.80% | 4.87% |
IA Mixed Investment 0-35% Shares | 7.31% | -4.28% | -4.25% | 6.29% | 4.89% |
IA Mixed Investment 20-60% Shares | 13.47% | -2.14% | -3.12% | 8.43% | 5.28% |
IA Mixed Investment 40-85% Shares | 17.21% | -0.86% | -1.62% | 10.60% | 5.33% |
IA Targeted Absolute Return | 8.47% | 0.93% | 0.17% | 7.40% | 5.09% |
IA UK Index Linked Gilt | -4.24% | -9.97% | -26.93% | 0.90% | -8.26% |
MSCI Japan | 9.24% | -1.88% | 6.73% | 15.87% | 5.34% |
MSCI AC World | 23.91% | 5.61% | 3.08% | 20.84% | 7.78% |
MSCI USA | 23.33% | 10.22% | 4.55% | 24.97% | 7.68% |
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, 12 months is a short time when looking 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 details on each fund and its risks, including charges, see the links to their factsheets and key investor information.
BNY Mellon Multi-Asset Balanced
BNY Mellon Multi-Asset Balanced was the strongest-performing Wealth Shortlist fund in this sector over the past 12 months. It returned 7.41%**, above its IA Mixed Investment 40-85% peer group average of 5.33%.
The fund invests in shares, bonds, and cash, but with a focus on shares. The shares part of the fund centres on the US, UK, and Europe.
Over the last 12 months, shares added the most value. With the amount invested in shares, it’s expected that this will have the biggest impact on overall fund performance.
The manager can invest in emerging markets, high yield bonds, smaller companies and derivatives, both of which add risk if used.
Schroder Managed Balanced
Schroder Managed Balanced was the worst-performing Wealth Shortlist fund in the sector over the last 12 months – it returned 5.13%.
The managers aim to grow your investment over the long term and mainly invests in other funds run by other managers at Schroders. This means the fund is very diversified and provides exposure to a broad range of assets, including global shares and bonds.
The managers tend to favour shares when the economic environment’s positive. But in times of stress, they shift to more diversified assets, like bonds and cash, aiming to minimise losses.
Please note that the managers' freedom to invest in high yield bonds, emerging markets and derivatives adds risk.
Annual percentage growth
May 20 – May 21 | May 21 – May 22 | May 22 – May 23 | May 23 – May 24 | May 24 – May 25 | |
|---|---|---|---|---|---|
BNY Mellon Multi-Asset Balanced | 17.03% | 6.30% | 4.44% | 10.74% | 7.41% |
Schroder Managed Balanced | 24.16% | -0.93% | -4.21% | 11.07% | 5.13% |
IA Mixed Investment 40-85% Shares | 17.21% | -0.86% | -1.62% | 10.60% | 5.33% |
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