A bit of magic from Merlin: the Jupiter Merlin Growth Portfolio

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A bit of magic from Merlin: the Jupiter Merlin Growth Portfolio

Multi-manager funds divide opinion. Some people like the idea of having a managed portfolio of funds and welcome the chance to ‘outsource’ all of their investment decisions, whereas others are unwilling to pay the extra layer of fees.

A lot will depend on how experienced you are in managing your own investments, but it is worth looking at how one of the better examples has performed to see what you can get for your money.

The multi-manager funds with the highest profile are the five Jupiter Merlin Portfolios headed up by John Chatfeild-Roberts. These are aimed at different groups of investors with Balanced, Conservative, Growth, Income and Worldwide mandates.

Jupiter Merlin Growth aims to achieve long-term capital growth by investing in funds that provide exposure to international equities, fixed interest, commodities and property, with a core weighting in the UK. It is actively managed both in terms of the asset allocation and the choice of underlying managers.

Chatfeild-Roberts accepts that on average, active managers tend to underperform the market, but says that a minority consistently do better. A key part of his role is to identify these people.

At the end of June the £1,928m portfolio consisted of 18 different funds. The largest allocation was the 34.1% exposure to UK equities courtesy of holdings in AXA Framlington UK Select Opportunities, CF Woodford Equity Income, Invesco Perpetual UK Aggressive, Jupiter UK Special Situations and Majedie UK Income.

Its next most significant weighting was US equities at 26.4%. This was made up of 3 funds: Findlay Park American, Jupiter North America Income and M&G North American Value. A further 15.4% was invested in Europe, with the balance divided between Japan, Asia, Emerging Markets, Global Equities and gold.

Chatfeild-Roberts and his team have put together an unusual portfolio with well-known funds like CF Woodford Equity Income, FundSmith Equity and First State Asia-Pacific Leaders sitting alongside highly regarded but less widely held products such as Findlay Park American and CF Morant Wright Japan. There are also 4 Jupiter funds, which sceptics might question.

There have been very few changes in the last six months, although it is interesting to note that the euro and yen exposures have both been hedged back into sterling. This has provided a welcome boost to the returns, as has the unhedged exposure to the US dollar.

The main downside to multi-manager funds is the double layer of fees that makes them so expensive. Jupiter Merlin Growth has an Annual Management Charge of 1.5% and Ongoing Charges of just over 2.4% per annum when you include the cost of all the underlying managers, but despite this it has still achieved a strong track record.

In the ten years to the end of July 2015 the fund is up 113.1%, whereas the Flexible Investment sector average is just 70.1%. It is also considerably ahead of the Dow Jones World Index over the same period. This is the strongest evidence that you can get that a well-run multi-manager fund can make a good ready-made portfolio.

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