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The AFI Cautious index outperformed its Aggressive and Balanced stablemates in season 12 but fell between comparative indices, with returns of popular funds ranging from 1.7% to 5.5%.
Fund Strategy will examine the implications of this month's Adviser Fund Index (AFI) rebalancing over the coming weeks. But before doing so, it is useful to look at how the three benchmark indices fared in season 12. AFI Aggressive and Balanced were put under the spotlight during the past two weeks, and this week it is the turn of AFI Cautious - a portfolio of funds designed for an investor in his late fifties.
Because of its mandate, AFI Cautious should perform with less volatility than its more aggressive stablemates. Asset allocation shifts tend to be more gradual, and so it proved in May, when the AFI panellists trimmed their fixed income and overseas equity weightings by two percentage points. European equities fell by one percentage point, while British and American equities and property rose by the same amount.
AFI Cautious marginally outperformed the Aggressive and Balanced benchmarks in season 12, with a total return of 3.4% between May and November. However, it fell about half-way between its competitors, trailing the Association of Private Client Investment Managers and Stockbrokers (Apcims) Income portfolio but beating the Investment Management Association (IMA) Cautious Managed sector.
Looking at the...