Pension Fund - FL Stewardship International

Yabadaba

Does anyone know how to decipher the pension fund report. I am confused by the contradictory information. Take for example the FL Stewardship International fund from Friends Provident:

factsheets.financialexpress.net/FRLE/LCG8.PDF

It's quartile ranking range between 1-2, and it performs better than it's sector. Over the last 5years, the value has gone up 60%...all good right? Then why does it only get 2 stars from FE Crown Fund Ratings?

Can anyone shed any light?

dunstonh

Then why does it only get 2 stars from FE Crown Fund Ratings?

Fund houses have to supply a lot of extra data to Financial Express to get the top ratings. You typically find the insurers dont do that on most funds. There are costs involved.

This is one of the reasons why you cant rely on ratings alone.

TH1878

The fund manager has taken more than average risk to deliver returns.

For example, you give me your life savings and I come back in a year's time having doubled your money. Great - top quartile return!

Not so great when I tell you I went to Vegas and put it all on red - I just struck lucky - bottom quartile risk.

Crown ratings show the risk-adjusted return and are a better indicator of a fund's performance.

Additionally, this fund is an ethical fund (in theory anyway!) which means that the range of investments they can choose from is limited; this increases risk because they won't invest in defensive stocks like Tobacco etc.

gadgetmind

Over the long term (10 years) that fund is matched/beaten by multi-asset funds that are far less volatile. However, you may perhaps be drawn to its ethical mandate?

Yabadaba

Thanks for all the responses.

@gadgetmind: Can you provide an example of the fund that performed better with less volatility?

TH1878

Yabadaba wrote: »

Thanks for all the responses.

@gadgetmind: Can you provide an example of the fund that performed better with less volatility?

Probably most of them but don't pick funds on past performance.

I used to work for Friends Provident who owned F&C who run the Stewardship International fund. When markets are doing well, it will do very well, but look at how it did in 2007 and 2008.

gadgetmind

Yabadaba wrote: »

Can you provide an example of the fund that performed better with less volatility?

For no other reason than it's a fund I use, try FL Balanced Index Enhanced Fund Of Funds. Trustnet is handy for comparing such things, so add funds to your basket, and then use the multichart plotting option. Note that you need to compare over 10 years to make sure you get a full cycle. Anything more heavy on equities will look good over shorter cycles as we've had a bull run. Of course, such things come to an end, but who knows when?

A multi-asset fund will be less volatile due to holdings of various bonds, property, etc. and also gets a boost from rebalancing. Of course, you can put together a portfolio of different funds, and rebalance yourself.

BTW, I fund that fund I mentioned a little heavy on UK and light on EM, so I do have other holdings alongside, but don't ask me to provide strong evidence that this will work better for me!