FE has announced the bi-annual rebalancing of its suite of FE Select Portfolios, risk-rated model portfolios designed for IFAs.
Two absolute return funds were introduced for the first time: Insight Absolute Insight was added to the three lowest risk portfolios, while Standard Life Investments Global Absolute Return Strategies was a new entrant in two of the medium risk portfolios.
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These funds brought significant diversification benefits to the portfolios, whilst providing greater upside than cash.
The FE Select Portfolios saw modest turnover with up to two funds changed apiece. Adjustments were made to maintain the risk profile and maximise diversification benefits.
The portfolios are arranged according to five risk levels with one being cautious and five being adventurous. Each risk bucket contains three portfolios, recommended for investors with short, medium and long time horizons respectively. At the higher octane end of the spectrum, Standard Life Investments European Equity Income and Jupiter Japan Income were both added for risk level five – long term.
Rob Gleeson, Head of Research at FE, noted: "Investors are becoming more confident as the global economic recovery gets underway. Generally speaking, equity investors are being rewarded, whereas those who have stuck to the traditionally defensive areas of fixed income have experienced largely flat or negative returns. Within equities, Japan’s stock market is reaping the rewards of premier Shinzo Abe’s policies, although it has been a bumpy ride along the way."
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By GlobalDataCazenove UK Opportunities proved a popular choice and was added to risk level two – short term and long term, risk level three – short and medium term, and risk level five – medium term.
Invesco Perpetual Income also scored on several fronts and was introduced for risk level one – long term, risk level two – medium and long term, and risk level five – short term.
Elsewhere, J.P. Morgan US Equity Income was incorporated into risk level three – medium term. Fidelity Strategic Bond entered the fray at risk level two – medium term. M&G Global Macro Bond was added to the short term options for both risk level one and two.
Rob Gleeson commented: "M&G has always had a high profile in UK fixed income investing; however, the global focus of the M&G Global Macro Bond fund offers a different skill set. With its unconstrained mandate, this five FE Crown Rated Fund has been top quartile over both one and three years, exhibiting a strong risk/return profile."
