On top of this there have been huge macro-economic events: the year began with the unveiling of the much vaunted tapering of the Fed’s quantitative easing program.
There has also been heated scrutiny on the strategy of the UK and US central banks to hike interest rates up from historically low levels.
Severe geopolitical tensions have also been heavily affecting investors outlook, particularly via the Ukraine/Russian crisis and the more recent conflict in Iraq.
Ironically, given these three factors, the bounceback in emerging markets has been one of the most striking developments of 2014.
The MSCI Emerging Markets index has been one of the most rapid-risers in 2014, up 2.95 per cent. However, the first three months of year were a lot more tumultuous with the index down up to 7 per cent.
Performance of index in 2014
Source: FE Analytics
Emerging market stocks were subject to a sell-off in January as the Fed launched its taper and fears spread about a currency crisis.
In the IMA Global Emerging Markets sector more than 90 per cent of funds - 71/78 - have made a positive return so far this year, and almost half have made a return greater than the rise in the index. Top performers included the €203m Carmignac Emerging Discovery, £34m Somerset Emerging Markets Small Cap and £674m Lazard Emerging Markets funds.
Another stand-out fund house in the sector is Goldman Sachs which has three of the top performing seven funds in the sector.
The GS Growth & Emerging Markets Broad, GS GIVI Growth & Emerging Markets Equity and GS Growth Markets Plus portfolios are all team-managed and have returned 7.6 per cent, 5.5 per cent and 5.37 per cent, respectively.
Of the other major indices, nearly all are up year-to-date apart from the FTSE 250 and the Topix.
Small and mid caps has been a difficult place for investors and fund managers this year with only 40 per cent of fund in the IMA Smaller Companies sector making money.
After several years of strongly rising markets in the space, the FTSE 250 is behind its large cap counterpart which is up 2.11 per cent compare to a 0.29 per cent fall.
Performance of indices in 2014
Source: FE Analytics
Despite its Prime Minister Shinzo Abe’s best efforts, Japan is continuing to experience hurdles in kick-starting its economy, with the Topix down 1.78 per cent in 2014. However, things have been looking up recently.
Over the past three months it has risen at a more rapid rate than any other major developed index, up 4.92 per cent.
Performance of indices in 2014
Source: FE Analytics
The US has been performing consistently with the S&P 500 and the Nasdaq 100 the strongest performing among developed markets. However a sell-off in tech and biotech stocks knocked back both markets, as well as spreading further afield, in April.
Markets have since mostly recovered but some specialist tech and biotech funds are still down from their pre-correction highs.
It’s been a busy year for the fund management industry, with Neil Woodford’s fund launch as well as several other management changes, not to mention the sad death of Unicorn’s John McClure.
Most column inches have been taken up this year with the transition of star manager from Invesco Perpetual and the launch of his own business Woodford Investment Management in Oxford.
Meanwhile, further down the Thames, Invesco Perpetual’s Mark Barnett has coped well with outflows in his Invesco Perpetual Income and High Income funds which have outperformed both from the start of the year and since he took the reins in March.
Another manager well-respected manager, Martin Gray, made an exit from running four Miton portfolios after ‘cordial discussions’.
FE Alpha Manager Alex Wright has had a hard start to the year after taking over at the £2.9bn Fidelity Special Situations fund, which has made a loss of 2.4 per cent in 2014.
Star manager Richard Buxton has also passed his first year as manager of the Old Mutual UK Alpha fund after his exit from Schroders in June 2013.
Buxton was one of several managers who predicted the FTSE 100 was set to smash through its psychological barrier of 7,000 this year along with Psigma’s Tom Becket and FE Alpha Manager Giles Hargreave. Whilst it is yet to happen the index rose to 6,877 points today in May, its highest level since the final day of trading in 1999, the previous high point.
However, overall the UK equities market has moved sideways, although the larger caps have tended to outperform smaller cap stocks.
The flatness of the market has also hit long/short funds with several of the top-rated and most popular struggling to make money despite an environment said to be suited to their strategy.
Europe has been one of the most contentious investment areas with slow but incremental improvements in fundamentals as well as positive returns for two-thirds of funds in the IMA Europe ex UK sector.
However, concern has also been ongoing over the falling rate of inflation in the eurozone from some whilst others have suggested the likelihood of QE by the European Central Bank is reason to buy the continent’s equities.
