Money Management looked at the volatility of the FE five-Crown rated funds in the Australian equities sector to see which funds have been giving investors the smoothest ride.
The ACS Equities – Australian sector had a cumulative volatility of 10.01 per cent over five years, and 10.39 per cent over three years.
The CI Brunswick fund has a cumulative volatility over a period of five years of 7.82 per cent, and 8.4 per cent over three years. The fund also managed to achieve a top-quartile maximum drawdown in nine years of the past decade, best protecting investor capital in the sector.
It’s clear when looking at the fund’s portfolio, it’s low volatility could be explained by investments in stalwarts and bond like equities, which are less-volatile in nature.
The Lazard Australian Diversified Income Fund had a cumulative volatility of 8.56 per cent over five years, and 8.6 per cent over three years, and managed to remain less risk than the sector from 2014 onwards.
The Ganes Focused Value fund was less volatile than the sector at 8.58 per cent over five years, but proved more risky in the short-term, exceeding the sector in 2016 and 2017.
The Lazard Australian Diversified Income Fund proved slightly more risky than the sector in 2013, while CI Brunswick fund remained less volatile than the sector over the entire five-year period.
The chart below shows the volatility of the funds compared to the Australian equities sector for each discrete year over five years.
Not only did the five-Crown funds give investors provide a lower-than-average risk environment, they also outperformed the sector over a five-year period as well.
The CI Brunswick fund returned 15 per cent, the Ganes Focused Value fund returned 10.15 per cent and the Lazard Australian Diversified Income fund returned 9.26, while the sector returned 9.10 per cent.
The chart below shows the performance of the funds relative to the sector over a five-year period.
Of the five-Crown funds, the DDH Selector Australian Equities fund, Bennelong Concentrated Australian Equity fund and Macquarie Australian Shares fund placed in the bottom quartile for volatility, reaching 12.28 per cent, 12.1 per cent and 11.91 per cent respectively.
