Skip to the content

The funds that made the 2010s’ highest and lowest returns

08 January 2020

With a new decade upon us, Trustnet finds out which funds are sitting at the very top of the leader board for the past 10 years.

By Gary Jackson,

Editor, Trustnet

The past decade has been called “the most unloved bull market in history” as the shadow of the global financial crisis hung over it despite stock markets breaching record highs and funds posting strong gains.

The worst of the financial crisis was through by the time 2010 arrived, although investors continued to be nervous for some time (arguably up until right now) and market performance was driven by loose monetary policy in the form of record-low interest rates and massive quantitative easing programmes.

But against this backdrop, which funds have made the most money for their investors? The Investment Association sector that has generated the strongest total return over the past decade was IA Technology & Telecommunications, where the average fund is up by 310.25 per cent.

While the opening decade of the 21st century was marked by the heavy losses that followed the dotcom bubble, the second 10-year stretch has seen information technology drive markets forwards as names such as the FAANGs (Facebook, Apple, Amazon, Netflix and Alphabet's Google) became investor darlings.

Adrian Lowcock, head of personal investing at Willis Owen, said: “In a world of low interest rates and low growth, investments in companies that offered much higher levels or high consistent growth were attractive to investors.

“Technology, having been in the wilderness since the bursting of the dotcom bubble, lead the way with a new generation of tech companies from Facebook to Netflix offering investors huge growth potential.”

 

Source: FE Analytics

The table above also reflects the strong performance of the US over the last 10 years, as the country has led the bull market because of its position as the world’s largest economy and the ultra-loose policies of the Federal Reserve.

Meanwhile, smaller companies funds focusing on the US, Japan, the UK and Europe have made high returns over the period under consideration, demonstrating their ability to outperform over the long run.

At the bottom of the performance tables are the two money market sectors, which would be expect given the bull market that has been witnessed in both stock and bond markets. However, Lowcock described the average total return of 26.36 from the IA Targeted Absolute Return sector – which has made the third lowest gain – as “a shocking decade”.

“Having been promoted as an asset class to offer protection following the financial crisis the sector has subsequently struggled,” he explained.

“This is a broad mix of investments and strategies so it is hard to judge the sector. The objectives of the sector through were always going to lag equity bull markets, but to make matters worse they also struggled to deliver when equity markets sold off.”

When the numbers are run for individual funds, it is Legg Mason IF Japan Equity that had the best showing of the 2010s after posting a total return of just over 700 per cent. This £982.5m fund has been managed by Hideo Shiozumi since its launch in October 1996; the manger has more than 45 years of experience of investing in Japanese equities.

 

Source: FE Analytics

Although the fund resides in the IA Japan sector, it has a bias towards small- and mid-cap stocks that Tokyo-based Shiozumi believes will benefit from trends such as Japan’s ageing population, changing consumers’ lifestyles and ‘internet empowerment’.

However, investors should be aware that these high returns have often given investors a bumpy ride. FE Analytics shows its annualised volatility over the past decade has been 21.67 per cent – which is the 24th highest out of the entire Investment Association universe – while it has been hit with some heavy losses at times.

In second place is Ben Rogoff and Nick Evans’s £2.7bn Polar Capital Global Technology fund, reflecting the strong rise of tech stocks with its total return of 471.66 per cent.

Square Mile Investment Consulting & Research said: “The fund is managed by experienced investors who are skilled in identifying changing industry trends and the companies that are poised to benefit as a result. We believe this is an attractive fund for long-term investors who are looking for exposure to rapidly growing technology companies.”

Fidelity Global TechnologyAXA Framlington Global Technology and tracker L&G Global Technology Index Trust are other members of the IA Technology & Telecommunications sector that made some of the Investment Association’s highest returns over the 2010s.

Even though UK equities have been out of favour in recent years because of Brexit and political uncertainty, some funds have made very strong returns indeed over the past decade.

Merian UK Smaller Companies Focus is ranked fourth in the Investment Association with its 454.22 per cent gain. Nick Williamson took over from Daniel Nickols as lead manager in 2016; the manager follows Merian’s well-established process, which combines bottom-up analysis with a thorough examination of the wider macroeconomic environment.

Analysts with FE Investments said: “We like Merian’s collegial team approach and its flexible stock selection approach, which combines bottom-up stock analysis with top-down macro views, the latter being that which distinguishes it from its peers, who focus largely on bottom-up analysis.”

Other UK equity funds appearing the top-50 performers of the past decade include Slater Growth, TB Amati UK Smaller Companies, Liontrust UK Smaller CompaniesLF Gresham House UK Micro Cap and Marlborough UK Micro Cap Growth.

 

Source: FE Analytics

Not every fund generated a healthy return of their investors over the 2010s, however, as the table above makes clear. Strategies that focus on commodities and energy had the worst showing, with MFM Junior Gold – an early-stage mining equity strategy – shedding more than 70 per cent.

“In a low interest rate world, you might think gold would perform as its lack of yield is less important, however it also offers little growth unless investors value it as such. Having played its role as preserver of capital in the financial crisis gold plateaued for much the 2010s and MFM Junior Gold suffered most as it had exposure to the more speculative end of the market,” Lowcock explained.

“Likewise, MFM Junior Oils trust suffered as the oil price collapsed reaching a low in January 2016. Energy and mining stocks all struggled as global growth slowed, recession never seemed far away and China struggled to transition from a global exporter to a domestic consumer.”

Editor's Picks

Loading...

Videos from BNY Mellon Investment Management

Loading...

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.