DGF wins and losses

The Lens has cast an eye over the diversified growth fund (DGF) sector, our curiosity being piqued by the fact that these funds were afflicted by poor performance earlier in the year but managed to make a comeback in the second quarter.

It has to be said the DGF sector has largely disappointed investors. For example, over 1 year and 3 years, the median returns at June 30 are way below the cash +3%-5% target, standing at 0.49% and 2.32% pa, respectively.

Nevertheless, a number of asset managers did still achieve target returns within their risk parameters – a fact that highlights the importance of manager research in the selection process and the continuous monitoring of asset managers in the DGF sector.

In Q2 this year funds targeting a return of cash +3%-5% median performance produced a positive median return of 7.99%. This was their best result since Q1 2019 and the turnaround in performance helped DGFs claw back some of their losses this year.

Unfortunately, the figures show us that despite the Q2 bounce-back, the tide of outflows could not be stemmed. DGFs saw their 12th consecutive quarter of redemptions in Q2, according to the Camradata DGF report for the period. This difficult Q2 came straight after DGF’s worst quarterly performance to date following the outbreak of Covid-19.