FUND FOCUS: CASH: Best performer 5 Yrs:Acorn Life Deposit Series 2 +15.5%
Worst performer 5 Yrs:Axa Financial Money Sterling Fund -8.6 %
WITH THE dismal performance of equity markets over the last few years, cash funds – once the choice of the conservative investor – have suddenly seemed an attractive and sensible investment option.
Cash remains a small but consistent presence in most investment portfolios – although, because most cash funds involve a high charge upfront, it is usually favoured more as a longer-term investment than a one- or two- year investment choice.
One of the trends of the last few years is that large international investment companies have seen investors move funds out of equities and into cash in the face of the equity market collapse.
According to MoneyMate, Irish managed cash funds over the five- year period to November 8th have returned an average of 9 per cent.
While the lowest performing funds saw a negative performance, this was due to the effect of currency changes, as some cash funds are based in sterling or dollar denominations.
Leading the rankings is Acorn Life’s Deposit Series 2 fund, which was up 15.5 per cent over the five years, followed by AIB Investor Managed Limited which returned 15.4 per cent over the same period.
Acorn Life’s Peter Doyle says the strong performance by its cash fund is down to a number of factors, including the fact that this particular fund is managed inhouse. This allows the Galway- based pensions and investment adviser to offer one of the lowest management charges in the market, he says, increasing returns for investors.
Secondly, the company projects the future expected cash flows of the funds. Rather than placing all of the cash in one or two-month deposit accounts, the maturity dates are spread over 12 to 18 months in order to match the cash flows and secure additional returns. Doyle says cash funds account for about 5 per cent of clients’ portfolios and attract customers with different profiles – from the more risk averse to savvy investors.
While the Axa Financial Money Sterling Fund came in at -8.6 per cent, this was due to currency movements. The company notes that, rather than falling in value, the company’s sterling and dollar cash funds in fact performed strongly, returning 16.4 per cent and 12.5 per cent respectively.
