Private Equity Trust Candover Investments was the top-performing fund of all, returning 34.87 per cent to investors, shortly followed by the rebounding Geiger Counter, a fund that specialises in uranium miners.
FE Trustnet revealed this morning that deep value funds have also been among the best-performing opened ended portfolios this year, implying there is a definite trend.
Russ Koesterich, BlackRock’s global chief investment strategist, suggests that globally there has been a shift from growth to value in the first part of the year.
“Although the broad equity averages may not be moving much lately, we are witnessing a significant sector and style rotation,” he said.
“In particular, some of last year’s high-flying segments of the market are now starting to come under pressure.”
“The US biotechnology industry, for example, was up roughly 65 per cent last year, but is now down 15 per cent from its peak in February.”
“In one sense, this shift suggests that glamorous, high-momentum types of stocks are less in vogue,” he added.
“It also speaks to the fact that the market appears to be experiencing a rotation away from growth and into value styles.”
“Over the past month, large cap value stocks have gained roughly 1.25 per cent, while large-cap growth has lost over 2 per cent.”
“This rotation is being driven in part by the fading of the momentum trading theme (which favoured growth styles), but it is also a result of a growing discrepancy in relative valuations.”
“As of the end of last month, growth stocks were trading at nearly a 40 per cent premium to value stocks, significantly higher than the 10-year average of around 25 per cent.”
Marwyn was tipped by Unicorn’s Peter Walls last September as one of the last “value” opportunities out there.
Source: FE Analytics
Candover Investments, the top-performing trust in the period, is in managed wind-down mode, meaning it is selling off its assets, as Simon Elliott, analyst at Winterflood Securities, explains.
“After two disposals in the last six months, we would expect more this year, with candidates including Innovia and ONO,” he said.
“However, in order to repay the new loan notes and allow the fund to contemplate returning capital to shareholders, some of the fund’s key holdings (Expro, Stork or Parques Reunidos) would have to be sold.”
“With Expro performing strongly last year, this may be the most realistic hope although the rest of the portfolio, with the exception of Stork Technical Services, also appears to be performing well.”
“CDI is still not without risk. The timetable for any future disposals is unclear and remains in the hands of the management team at Arle. In addition the portfolio is highly concentrated. However, we believe that there could be considerable upside to both the fund’s share price and NAV in the next few years as a result of key disposals.”
Performance of trust vs sector since Jan 2013
Source: FE Analytics
Geiger Counter has rebounded after the Japanese government made positive noises about the possibility of increasing its use of nuclear power after the Fukushima disaster took that off the agenda.
It remains a highly specialised play on a particular industry and therefore highly risky, however.
The top-performing sector over the period has been the utilities sector thanks to the strong performance of two of its three funds, both of which made the top 10.
Premier Energy & Water and Ecofin Water & Power Opportunities have both returned over 17 per cent during this period.
New City Golden Prospect Precious Metal has benefitted from the rebound in gold and the gold mining sector to return 13.93 per cent in share price terms, while property funds have also done well.
In fact, the property securities sector is the fourth best overall with returns of 7.73 per cent while the direct property sector has also fared well, returning 3.73 per cent, putting it in the top 10 sectors out of 45.
Personal Assets, Capital Gearing and British Empire were among the struggling funds to have soared to the top of their respective sectors in the first quarter of 2014 as defensive funds’ relative performance improved.
Personal Assets is up 4.57 per cent in the year-to-date as the FTSE All Share has been essentially flat.
Performance of trust vs sector and index in 2014
Source: FE Analytics
Capital Gearing is up 4.62 per cent as the global growth sector has made just 1.39 per cent.
