DGFs and MSFI funds struggled in Q4

Diversified growth funds (DGFs) found it hard to locate sources of growth and to find sufficient refuge during a challenging last quarter of 2018 for investors.

That was the key finding of a new report on DGFs from data analysis firm Camradata. Despite the fact that DGFs are designed to deliver growth-driven return across a broad spectrum of market conditions, performance was down during the quarter.

Less than 2% of funds surveyed experienced a break-even or positive return over the quarter. “This is a striking deterioration compared with the past two quarters, when more than 70% of funds in each period achieved break-even or positive return,” the report concluded.

A separate Camradata report on multi-sector fixed income (MSFI) funds found that they experienced a “marked deterioration” in performance during Q4 2018, with less than 30% of products in the Camradata universe achieving break-even or positive return.

“This compares poorly with the preceding quarter, when 82% of these products achieved break-even or better,” the report concluded.

“Over a three-year timeframe, however, the performance numbers are more encouraging, with 93% of products meeting this performance target.”

Camradata managing director Sean Thompson said: “Concerns over trade and economic growth presented a challenging final quarter for investors.

“This left many seeking to rebalance portfolios towards lower risk assets. However, global liquidity tightening is the order of the day and this presents headaches for investors considering an increase in their bond allocations.

“These turbulent conditions provide both a test and an opportunity for diversified growth funds. Furthermore, rising interest rates present a challenge to fixed income managers that they have not had to contend with in a number of years. Our reports highlight poor performances for both at the end of 2018.”

Camradata, part of the Punter Southall Group, is the owner of Funds Europe.

©2019 funds europe

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