The best and worst funds over a year of confinement


In a year like no other, the performance of risky assets often seemed remarkably out of touch with real-world events.

Any advisor will know that, as the old saying goes, the stock market is not the economy – but there were times when it felt like the two were going in completely opposite directions.

Against this backdrop, it should come as no surprise that market lows for many stock indexes, including those in the UK, were hit on March 23 – the same day the UK entered in full lock for the first time.

Buoyed first by central bank support and then by hopes of an economic recovery, investment markets found the next 12 months to have gone surprisingly well. The rally turned out to be quick and, in hindsight, prolonged.

In fact, over 60 equity funds in the Investment Association’s investment universe have more than doubled their holders’ money over the past year. Their specific investment goals span a number of regions and specialties, but there is a certain degree of similarity between some of the absolute best deals.

On the other side of the ledger, the worst performer will be sadly familiar to almost any advisor. Yet outside of this portfolio, only one fund has lost 15% or more in the past 12 months, underscoring how lucky investors have been over the period.

Nonetheless, three other more recent difficulties, detailed below, could be a sign of tougher times ahead for parts of the advisers’ portfolios.

Below are the top five and five worst portfolios of the year through March 22. All data is from FE, based on funds open to all advisors, and returns accrued by a sterling investor.

The best funds

Premier Miton UK Small Business 192.3%

Until recently, conventional UK stock indices had failed to keep up with their peers over the past 12 months. But some small business strategies have flourished, benefiting first from the rebound in risky assets seen in Q2 2020, and then from investors’ emerging belief in the economic recovery. That said, the Premier Miton fund, managed by Gervais Williams and Martin Turner, is more than 70 percentage points ahead of any other UK small-cap strategy over the period in question.

MFM Junior Gold 160.5%

It’s been a different year for the small Junior Gold portfolio, which buys gold mining stocks. These companies recovered faster than almost any other asset last spring, meaning the fund gained 175% from March lows in just four months. Since then, however, the price of gold has started to stutter, as has the fortunes of precious metal miners.

Legg Mason Royce US Small Cap Opportunity 147.4%

Of all the small business sectors around the world, US small caps have taken off the most in recent months. Investors shied away from the names of the tech, but remained keen to take advantage of the new US administration’s fiscal stimulus packages. The rise of the retail investor in the United States has also particularly benefited small businesses.

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