There were many predictions as to what would eventually cause implied volatility to spike from its record lows over the summer, but it seems this week’s fall has been down to a combination of factors such as the chancellor’s comments about the eurozone, the Ebola outbreak and events in the Middle East.
We will be dedicating a number of articles next week looking what various managers are doing with their portfolios following the sell-off.
Here are some of our favourite funds this week, however.
Have a great weekend.
Why FE Trustnet will be battling "one of the biggest travesties" in the fund management industry
The first one was an awareness piece. The point behind starting this campaign stems from a fund’s dividend history being notable in its absence from most fact sheets, despite investors being told they need a growing source of income and fund managers say that they are all about dividend growth.
We wanted to highlight this issue and try to make distribution history more transparent, which hopefully in turn will help the underlying investor gain a better understanding of income.
We are going to be writing a number of articles on this theme and the most positive part is that it seems to be gaining traction.
The UK equity income funds increasing your dividend the most
Immediately after that, we looked at the funds in the IMA UK Equity Income sector that have increased their pay-outs the most over recent years.
As a starting point, we looked at all the members of the sector that have a full track record spanning 1 January 2007 to 31 December 2013 and worked out how much income has been paid in each calendar year on an initial investment of £1,000.
The best dividend growers included the likes of Montanaro Equity Income and Trojan Income.
This article was put together following a sterling bit of data collection from news editor Gary Jackson and thanks to the fairly sizeable spread sheet he has now put together we will be writing a number of research-based articles surrounding all things income-related.
Beware bestselling and soft-closed funds, warn Metcalfe and Richards
IBOSS’ Chris Metcalfe and Thesis’ Steven Richards told editor Josh Ausden why investors should contemplate selling funds that are about to soft-close, because it is usually a sign that they are past their best.
One notable example Metcalfe gave was Schroder UK Opportunities, which he sold out of last year due to size concerns.
The group had stopped marketing the fund due to concerns about the rate of inflows and, due to various factors, it has underperformed recently.
Performance of fund vs sector and index over 1yr
Source: FE Analytics
As well as Schroder UK Opps, Metcalfe has sold out of M&G Global Dividend, Newton Asian Income, Blackrock UK Special Situations and M&G Recovery due to concerns over capacity over the past 18 months.
All have underperformed their benchmarks in 2014.
They may be top-performing funds, but how much money have they actually made you?
This article, with the help of fund flow data from FE Analytics, showed that while looking back at a fund’s past performance is useful, a lot of investors may have had very different outcomes depending on when they bought and sold their units.
The likes of M&G Recovery, PFS Chelverton UK Equity Income and Aberdeen Global Emerging Markets Smaller Companies are all examples of top-performing portfolios, but actually a lot of investors in them may have underperformed if their timing was wrong.Premier’s Simon Evan-Cook was a big help with this article and he says the issues of poor timing and chasing trends should be highlighted more.
“It’s an issue that is worth tackling because I do believe the biggest destroyer of wealth for an investor is chasing trends and basically buying, or selling, at the wrong time,” Evan-Cook (pictured) said.
Volatility spikes: So which funds should you be buying?
Equities have since sold off even more, but at the start of the week we looked at some of the open-ended funds that are arguably more attractive in light of the recent turbulence sweeping through markets.
Josh Ausden spoke to a various industry experts and the likes of CF Woodford Equity Income, JOHCM UK Dynamic and Threadneedle Growth & Income were all highlighted.
