Best performing medium risk ready-made solutions of April – June 2023
Which medium risk portfolios performed the best?
By Boring Money
20 July, 2023
Every three months we get performance data from the leading ‘ready-made’ investment portfolios made available to retail investors. We group these into three risk categories and take a look at who has performed the best after all fees and charges over various timeframes. In this article, we show you the results for medium risk ready-made solutions and explain what's been happening.
Annual medium risk returns to June 2023
This graph illustrates 1-year returns net of charges for the top 5 performing ready-made solutions that are covered in our analysis. Performance covers the period between July 2022 – June 2023. Data correct as of 30th June 2023. The full fund/portfolio names can be found in the table below.
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How did medium risk ready-made solutions perform in Q2 2023?
The medium risk portfolios have returned an average of -4.3% over the last 2 years.
AJ Bell, Moneybox and HSBC have been the top performers here, whilst Nutmeg and Vanguard's LifeStrategy 40 have struggled. With around 40% in shares, we would expect solutions like Vanguard LifeStrategy 40 and Bestinvest’s Smart Cautious option to perform less strongly than others in this category with higher allocations to shares.
Moneybox has a high equity allocation, with 65% of the portfolio in Fidelity's popular Index World fund, which has returned over 13% in the last year. Detractors may note the lack of diversification of underlying funds or argue for more sophisticated options, but this fund has had very strong momentum over the last few years and so, if your bottom line is returns, you’re not complaining.
AJ Bell's equity allocation is more modest, currently sitting at around 56%. Tilts have been made in favour of firms with a giant market cap and Emerging Markets in Asia - although the latter has detracted from performance, with HSBC's Emerging Market ETF returning -10% in 2022. HSBC's balanced fund has a 60% geographical allocation to the US, which helps to contextualise its relatively strong performance.
We asked Nutmeg if they could shed some light on any notable contributors and detractors of growth across the past couple of years. A spokesperson for the company mentioned Nutmeg's structural UK bias as a detractor of recent performance, with UK equities underperforming other global markets, the pound underperforming the dollar and Gilts (UK government bonds) underperforming global bonds.
On the flip side, Nutmeg has run underweight in its bond allocation over the past few years, which has been positive for performance, given the poor performance of the bond sector over this period.
Best performing medium risk ready-made solutions in Q2 2023
Provider | Fund / Portfolio | Risk Level | Q2 2023 Net Growth | 1 Year Net Growth | 2 Year Net Growth |
Moneybox | Balanced | Medium | 2.23% | 5.39% | 1.24% |
HSBC | Balanced | Medium | 1.62% | 3.80% | -1.97% |
Charles Stanley | Multi Asset Growth | Medium | 1.31% | 4.84% | -7.97% |
Hargreaves Lansdown | Balanced Managed | Medium | 0.96% | N/A | N/A |
Vanguard | LifeStrategy 60 | Medium | 0.48% | 3.70% | -3.87% |
Bestinvest | Smart Growth | Medium | 0.42% | 5.28% | N/A |
True Potential | Balanced | Medium | 0.35% | 2.39% | -5.92% |
Wealthify | Confident | Medium | 0.24% | 1.19% | -5.76% |
Bestinvest | Smart Cautious | Medium | -0.40% | 3.25% | N/A |
AJ Bell | Balanced | Medium | -0.42% | 2.44% | 1.29% |
Vanguard | LifeStrategy 40 | Medium | -0.48% | 0.39% | -8.65% |
Nutmeg | 5 | Medium | -0.85% | 1.11% | -8.11% |
Santander | Multi-index Fund 4 | Medium | -1.05% | 2.39% | -3.40% |
This table displays performance over multiple timeframes across the past 2 years for a range of investment funds/portfolios. Performance has been calculated net of investment and platform charges. Risk levels have been classified based on Boring Money’s parameters, which can be found in the ‘key terms’ section. Performance figures have either come directly from platforms or been estimated using the value of fund assets, assuming frequent rebalancing.
Key terms:
Provider
The investment provider offering and managing the ready-made solution.
Fund/Portfolio
The name of the particular fund/portfolio held on the investment provider’s platform. This will typically include a mixture of cash, bonds and shares at different proportions depending on your chosen risk level. All funds/portfolios included in this article can also be classified as ready-made solutions.
Risk Level
The perceived level of risk associated to a ready-made solution. Boring Money assign each ready-made solution to a risk level, based on its equity allocation. For the purpose of this exercise, there are three risk levels. Investments with an equity exposure of under 35% are considered low risk, investments with an equity exposure between 35% - 75% are considered medium risk, and investments with an equity exposure above 75% are considered high risk.
Q2 2023
'2nd quarter'. The period between 1 April 2023 and 30 June 2023.
Net Growth
The total growth of a ready-made solution minus charges. Charges include both fees paid for managing the investment and fees paid for using the investment provider’s platform.
