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The funds that just had their only top quartile year since the financial crisis

09 January 2019

Last year might have been a difficult one for markets but a number of funds have just gone to the top of their sector for first time in more than a decade.

By Gary Jackson,

Editor, FE Trustnet

Even though 2018 presented investors with some very challenging conditions to navigate, 28 funds in the Investment Association universe were able to rise to the top of their peer group for the first time since at least the global financial crisis.

Concerns such as tighter monetary policy, the US-China trade war, uncertainty over Brexit and slower global growth meant that last year was a weak one for markets. FE Analytics shows the average member of 31 of the Investment Association’s 37 fund sectors recorded a loss in 2018.

This meant the majority of funds ended the year in negative territory. Out of 3,764 funds in the Investment Association universe, only 422 – or 11.2 per cent – ended 2018 with total return higher than zero.

Performance of Investment Association sectors in 2018

 

Source: FE Analytics

Given this backdrop, FE Trustnet reviewed the Investment Association universe to see if any funds have just had their first top quartile year since the global financial crisis struck markets in 2008. Our data shows that there are 1,304 funds with a track record spanning the 11 years between 2008 and the end of 2018 and 28 of were never in their sector’s top quartile for a full year until last year.

Obviously, there are plenty of funds that have done much better than this. LF Lindsell Train UK Equity, for example, has been a first quartile performer in the IA UK All Companies sector for 10 of the past 11 full calendar years while Jupiter European has been in top quartile of IA Europe Excluding UK in nine of the years.

However, below we look at the funds that – for whatever reason – haven’t made it into the first quartile until 2018.


All of the 28 funds that have just had their first top quartile year since at least 2008 can be found in the table below, ranked by their total return in 2018. As can be seen, Comgest Growth America tops the list with a 9.09 per cent gain last year.

The £110.9m fund, which resides in the IA North America peer group and holds three FE Crowns, is managed by Christophe Nagy, Alexandre Narboni and Joshua Veit. The portfolio is built around high-quality US growth stocks, with top holdings including Becton, Dickinson and Company, Medtronic and Walmart.

Despite the fact that the fund hadn’t been in the top quartile until 2018, its performance was strong enough to mean that its 219.19 per cent total return over the full period covered by this research (1 January 2008 to 31 December 2018) was the 19th highest in the sector – and puts it in the first quartile over this time frame.

 

Source: FE Analytics

Reflecting the fact that the US was again one of the strongest parts of the global equity market, the top three funds on the table are from the IA North America sector although Fidelity American and Legg Mason IF Martin Currie North American made around half of what Comgest Growth America did.

The largest fund on the above list is SSgA Europe ex UK Equity Tracker, which has assets under management of £4bn, followed by the £3bn L&G European Index Trust.

It’s indicative of the difficulties faced by European funds last year (in addition to global trade tensions, Europe suffered from disappointing economic growth and a political row over the Italian budget) that two index trackers found themselves in the top quartile of the IA Europe Excluding UK sector.


The sector with the most funds on the list is IA UK All Companies, which has been shunned by investors in recent years because of the UK’s impending departure from the EU. That said, it remains one of the largest Investment Association universe.

The FTSE All Share was hit hard by the events of 2018, with Brexit obviously having more of an impact here than on its international peers, and the index posted loss of 9.47 per cent (in total return terms) for the year.

Only three of the sector’s 267 members avoided making a loss last year and this meant that funds could be in its top quartile if they fell by up to 8.84 per cent. Of the five IA UK All Companies funds to make it onto the list above, Family Charities Ethical was the best performer but investors still took a 6.11 per cent loss.

 

Source: FE Analytics

The above research only looked at the funds with a track record going back to at least 2008 but we repeated it for shorter time frames to see which funds have launched since then and just had their first top-quartile year.

Our data shows that 97 funds have just done this, with the top 25 by their 2018 returns being shown in the table above.

Neptune Global Technology made the highest total return of 14 per cent. If we look at the entire Investment Association universe, this was the fourth-highest return of the year – beaten only by GAM Star Alpha Technology, Polar Capital Healthcare Opportunities and BNY Mellon Brazil Equity.

Other well-known funds achieving this include Liontrust UK Micro CapTrojan Global Income and Rathbone Strategic Bond.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.