Over the three months to end of October, we’ve seen both the Federal Reserve (Fed) and the Bank of England (BoE) hold interest rates rather than increase them – this is a change from the previous 11 and 14 meetings respectively where they raised them. At the start of November, they held rates for a second time.
We’ve also seen economic data in the UK and US be mixed over the period.
The UK has seen revisions upwards to previous estimates of growth since the pandemic, however more recent activity looks to be flat at best.
In the US, there was strong growth data in September which has been followed by weak employment data in October.
This article isn’t personal advice. If you’re not sure whether an investment is right for you, ask for financial advice. Investments and any income they produce can fall as well as rise in value, so you could get back less than you invest. Past performance isn’t a guide to the future.
How have stock markets performed?
Shares have provided negative returns over the three months to the end of October, with the FTSE All World recording losses of 4.78%*.
The US has lost the least value, with the FTSE USA index returning -2.77%* over the period to the end of October. The strong economic growth data in September helped limit losses for the region, even though unemployment showed signs of increasing in October.
Over the same period, the worst performing index was FTSE China, losing 10.31%*. China’s continued to face headwinds linked to weak economic growth, a liquidity crisis in their property sector and increased geopolitical tensions.
Within global stock markets, ‘value’ style stocks have lost less than their ‘growth’ style peers, although the difference hasn’t been huge.
What about bonds?
Interest rates and inflation have been key reasons behind the losses in bond markets since the start of 2022.
With both the Fed and BoE holding rates during their last two meetings, there’s greater hope that we might be nearing the end of the current interest rate rising cycle.
However, this hasn’t stopped bond yields from continuing to rise over the quarter. These rises have been broadly put down to an acceptance that while there might not be many more interest rate increases from central banks, it’s expected that current rates will remain in place for longer.
The best performing bond sector over the three months to end of October was the IA £ investment grade corporate bond sector, while government bonds have been the worst performer.
How have mixed asset and total return funds performed?
Funds that invested more in shares and less in bonds have seen better returns over the past five years. Funds in the IA Flexible Investment and IA Mixed Investment 40-85% Shares sectors have performed best over this period as they generally invest more in shares.
This trend has continued over the past year. However, the variation in returns has been quite limited as different investments have been in favour during different parts of what’s been a volatile 12-month period.
The best performing mixed-asset sector over the last 12 months was the IA Targeted Absolute Return sector, with the sector average performance of 3.05%*.
Funds in this sector have few limitations on what they can invest in, tend to be defensively minded and are able to change their investments significantly if they want to.
The worst performing sector was the IA Mixed Investment 0-35% Shares sector. The average fund in this sector returned 0.86%*. The lower gains reflect a higher weighting to bonds which haven’t benefited as much from stock market rises earlier in 2023 compared to other sectors.
Performance of mixed asset and total return sectors over 12 months
Scroll across to see the full chart.
Past performance is not a guide to the future. Source: Lipper IM, to 31/10/2023.
Annual percentage growth
| Oct 18 – Oct 19 | Oct 19 – Oct 20 | Oct 20 – Oct 21 | Oct 21 – Oct 22 | Oct 22 – Oct 23 | |
|---|---|---|---|---|---|
| FTSE China | 11.99% | 37.00% | -13.77% | -37.33% | 13.72% |
| FTSE USA | 12.86% | 11.31% | 35.01% | -0.50% | 4.64% |
| IA £ Corporate Bond | 8.54% | 4.64% | 1.12% | -18.06% | 3.50% |
| IA UK Gilt | 10.20% | 5.93% | -5.05% | -22.60% | -6.18% |
| IA Flexible Investment | 7.57% | 0.41% | 21.06% | -10.07% | 1.92% |
| IA Mixed Investment 0-35% Shares | 5.94% | 0.19% | 7.20% | -11.77% | 0.86% |
| IA Mixed Investment 20-60% Shares | 6.77% | -1.82% | 14.61% | -10.79% | 1.70% |
| IA Mixed Investment 40-85% Shares | 8.20% | -0.91% | 19.96% | -10.52% | 2.00% |
| IA Targeted Absolute Return | 2.54% | 0.47% | 6.58% | -1.56% | 3.05% |
Past performance is not a guide to the future. Source: *Lipper IM, to 31/10/2023.
How have mixed asset and total return funds on the Wealth Shortlist performed?
Our Wealth Shortlist funds have delivered different returns over the past 12 months. They have different approaches and objectives though, so we don’t expect them to perform in the same way.
Remember, 12 months is a short timeframe when looking at how an investment has performed. Investments should be held as part of a diversified portfolio for the long term – by long term we mean at least five years.
Investing in these funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
For more details on each fund and its risks, please see the links to their factsheets and key investor information below.
BNY Mellon Multi-Asset Balanced
BNY Mellon Multi-Asset Balanced was the strongest performing Wealth Shortlist fund in this sector over the past 12 months. It returned 4.29%** – above its IA Mixed Investment 40-85% peer group average of 2.00%.
The fund invests in shares, bonds and cash, with a focus on shares. Within the shares part of the fund, there’s a focus on the US, UK and Europe.
Over the last 12 months, the shares part of the fund has added most value, with cash also providing positive returns given the high interest rates on offer.
Bonds have lost value, but the lower proportion held in bonds has meant that the gains on shares and cash have outweighed these losses over this period.
Please note that the manager can invest in emerging markets and derivatives, both of which add risk if used.
BNY Mellon Sustainable Real Return
BNY Mellon Sustainable Real Return was the worst performing Wealth Shortlist fund in the sector over the last 12 months. It returned –3.80%.
The managers try to provide some shelter during market wobbles, while also delivering some long-term growth. It invests in a diversified set of shares, bonds and derivatives, with an emphasis on companies that meet it’s environmental, social and governance (ESG) criteria.
The managers use derivatives with the aim of adding some stability to returns. However, this approach adds risk and over the last 12 months, derivatives have lost the most value, with investments in alternative assets also losing value.
It wasn’t all bad though with some of the funds’ investments in company shares, cash and precious metals adding value.
Please note that the managers can invest in emerging markets and high yield bonds, both of which add risk if used.
Annual percentage growth
| Oct 18 – Oct 19 | Oct 19 – Oct 20 | Oct 20 – Oct 21 | Oct 21 – Oct 22 | Oct 22 – Oct 23 | |
|---|---|---|---|---|---|
| BNY Mellon Multi-asset Balanced | 12.52% | -0.97% | 24.83% | -2.07% | 4.29% |
| IA Mixed Investment 40-85% Shares | 8.20% | -0.91% | 19.96% | -10.52% | 2.00% |
| BNY Mellon Sustainable Real Return | 11.65% | 4.72% | 12.30% | -13.13% | -3.80% |
| IA Targeted Absolute Return | 2.54% | 0.47% | 6.58% | -1.56% | 3.05% |
Past performance is not a guide to the future. Source: **Lipper IM, to 31/10/2023.
VIEW BNY MELLON MULTI-ASSET BALANCED FACTSHEET INCLUDING CHARGES
VIEW BNY MELLON MULTI-ASSET BALANCED KEY INVESTOR INFORMATION
VIEW BNY MELLON SUSTAINABLE REAL RETURN FACTSHEET INCLUDING CHARGES
VIEW BNY MELLON SUSTAINABLE REAL RETURN KEY INVESTOR INFORMATION
Fund Insight: our weekly email
Sign up to receive our expert fund research and insights.
Please correct the following errors before you continue:
Hargreaves Lansdown PLC group companies will usually send you further information by post and/or email about our products and services. If you would prefer not to receive this, please do let us know. We will not sell or trade your personal data.
Our fund research is for investors who understand the risks of investing and that investing in funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.