Mark Dampier: Peirson's picks help AXA fund to long-term success
Friday 11 January 2013
It is not the most glamorous sounding investment but AXA Framlington Managed Balanced is probably the type of fund most investors should own. Like most funds in its sector it blends a range of equities, bonds and cash to form a ready-made portfolio.
The manager, Richard Peirson, has one of the longest track records – he has been running it since 1994 – and one of the best. The numbers speak for themselves: £10,000 invested in the fund at launch would be worth £51,720 today against £31,185 for the sector and £44,580 for the FTSE All Share with dividends reinvested.
At the heart of the fund is a simple approach – invest up to 80 per cent in equities and the remainder in bonds and cash. The latter component has the effect of dampening the volatility of the fund, and Mr Peirson favours government bonds over corporate bonds as they are less correlated to equity markets. If he wishes he can increase this more stable part of the portfolio if he believes equities look vulnerable, though he tends to be guided by valuations rather than any macro-economic news.
At present the fund has close to 80 per cent in equities and around 20 per cent in cash and bonds, around half of which is cash as he views many sovereign bonds as expensive. While he has favoured German Bunds in particular, he has recently been trimming back his positions because yields have fallen so much.
Mr Peirson looks after stock selection within the UK equities and bond components of the fund himself. For overseas equities, which represents around half the equity component, he decides the size of the allocation to each geographic area, but individual stock selection is taken care of by other AXA Framlington managers such as Stephen Kelly, who runs the American Growth Fund.
Mr Peirson will question them and discuss what they are doing but he won't interfere with their investment processes, leaving them to run their portfolios as they see fit.
So how has the fund outperformed so significantly over the past few years? A large part of it has been the UK equity component of the portfolio run by Mr Peirson. Many managers of this type of fund will tend to invest only in the FTSE 100, the largest companies on the UK market. Mr Peirson, however, looks for opportunities in the next tier, the FTSE 250, which has outperformed the FTSE 100 considerably over the past decade.
Here, he has been able to uncover some outstanding opportunities, and he continues to be excited about this part of the market despite weakness in the UK economy. For instance, he has added to housebuilders Barratt Developments and Persimmon over the past year. This is nothing to do with any view that mortgage lending is about to pick up, more that expensive land bought pre-2007 is falling out of their inventories and cheaper land bought subsequently is taking up a greater proportion. This is gradually improving margins. He has also invested in Imagination Technologies, a UK firm making microchips for Apple and Samsung mobile products. There are also some traditional blue-chips in the portfolio including BT, which he thinks will be a major beneficiary of broadband services.
While this is a fund whose manager has 40 years' experience, he is clearly not going to go on for another 40 years. However, there is an excellent team behind Mr Peirson and despite the charges of the fund being slightly higher than some of its competitors – turgid pension and insurance funds with low charges but lacklustre performance – it has shown them a clean pair of heels for a very long time. I believe it continues to be a fine choice of fund for those investing for the long term in their pension or ISA.
Mark Dampier is head of research at Hargreaves Lansdown, the asset manager, financial advisor and stockbroker. For more details about the funds included in this column, visit www.hl.co.uk/independent
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 2 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 3 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 4 AirAsia flight QZ8501 missing: Plane carrying 162 passengers from Indonesia to Singapore disappears over Java Sea
- 5 Naomi Wolf reacts to Isis 'conspiracy theories' critism after she questions whether beheading videos are real
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Millions of Britons struggling to feed themselves and facing malnourishment
Immigrants make UK racist, says Ukip councillor Trevor Shonk
Nigel Farage: Ukip leader named 'Briton of the year' by The Times
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
Day In a Page
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens