Yesterday, FE Trustnet showed that the IMA China/Greater China sector was the best performing peer group with an average return of 5.64 per cent over the three-month period while David Gait and Sashi Reddy's £250m First State Indian Subcontinent fund was the best performing portfolio, with a 17.16 per cent gain.
Looking at the other side of things, however, shows more than 1,200 of the 3,374-strong IMA universe failed to post a positive return over 2014’s third quarter.
Around 150 of these have assets of more than £1bn. FE Analytics shows Evy Hambro’s £1bn BlackRock Gold & General fund was the giant portfolio to have lost the most money over the three months with a fall of 10.62 per cent.
Gold equities have had a tough time for the past couple of years and the recent quarter proved no exception.
Performance of fund vs index in Q3
Source: FE Analytics
Since Hambro took over the portfolio in April 2009, the fund has fallen 31.16 per cent - although this is significant outperformance to the 46.02 per cent drop in the FTSE Gold Mines index.
However, BlackRock has a long track record of investing in natural resources and this is one of the reasons BlackRock Gold & General appears on the FE Research Select 100 list of recommended funds.
The FE Research team said: “It is well ahead of many other gold funds in terms of performance and it has also taken on less risk. The fund would be well suited to an equity portfolio, as performance between this asset class and gold has shown little correlation over long periods of time.”
Uwe Zoellner’s £2.1bn Franklin European Growth fund was another giant fund that suffered over the third quarter. It lost 8.92 per cent over the three months, compared with a fall of just 2.47 per cent in its MSCI Europe benchmark.
Performance of fund vs sector and index in Q3
Source: FE Analytics
The fund was soft-closed to new investors in July after Franklin Templeton moved to protect the portfolio’s investment approach following inflows of more than £450m over the previous six months.
Managers Michael Clements and Claire Manson then departed the asset management house at the start of August, upon which the fund was handed to Zoellner.
Zoellner is Franklin Templeton’s head of European equity and is based in Frankfurt.
Franklin European Growth’s performance in the third quarter was hampered by its overweights to European industrial and consumer discretionary stocks as both sectors underperformed the broader MSCI Europe index.
Meanwhile, European healthcare companies - which the fund is underweight - gained more than 5 per cent.
The third worst performing giant fund was Hambro and Catherine Raw’s £4.9bn BlackRock Global Funds World Mining.
This portfolio, which Hambro has managed since launch in March 1997, offers exposure to the global mining sector.
It fell 7.97 per cent during the third quarter, underperforming its Euromoney Global Mining Index benchmark’s 6.49 per cent drop.
Mining stocks have been hit hard by slumping commodity prices driven by a stronger US dollar, stronger supply and signs of weaker growth in China.
Performance of fund vs index in Q3
Source: FE Analytics
Longer term returns have been stronger - the fund is up 73.86 per cent over 10 years, although this is still outpaced by the 118.39 per cent growth in the benchmark.
It had a strong run between October 2008 and January 2011 but has been trending downwards since after sentiment turned against miners.
One large fund that sticks out in the ten worst performing giant funds of the quarter is Tom Dobell’s £6.3bn M&G Recovery fund, which fell 6.14 per cent.
The FTSE All Share dropped just 1.80 per cent over the three months while the average fund in the IMA UK All Companies sector shed 1.32 per cent.
M&G Recovery has struggled over recent years and sits fourth quartile over one, three and five years as well as over shorter timeframes.
Nonetheless, supporters of the fund point out that its investment process is inherently long term and Dobell will not break this to chase short-term gains.
Its long-term track record, on the other hand, is more impressive - returning 140.77 per cent compared with the All Share’s 82.13 per cent and a peer group average of 76.45 per cent.
But it must be noted that the fund’s recent underperformance has spanned the recovery from the financial crisis, when many expected it would have flourished.
Another notable underperformer is the Sanjiv Duggal's £1.8bn HSBC GIF Indian Equity fund, which lost 6.62 per cent despite the fact that many Indian equity vehicles were some of the quarter’s best performers.
Over 10 years the fund has returned 209.52 per cent, although this is below the 317.13 per cent gain in its S&P IFCI India benchmark.
Source: FE Analytics
