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Under the bonnet of the most popular funds on FE Trustnet

11 November 2014

FE Trustnet examines the funds that have been the most popular on our website over the past month to find out if they are worth a closer look.

By Daniel Lanyon,

Reporter, FE Trustnet

Readers of FE Trustnet appear to have shrugged off recent market falls if the funds most searched for on the site over the past month are anything to go by.

Most of the funds are big hitting names led by or connected to star managers and all apart from one have been through recent periods of significant outperformance.

Three of the top five funds appear in our AFI panel’s Aggressive index. The other is a new fund launch from a well-known name that has attracted a great deal of attention over recent months.

Here we take a look at the funds, in order of their popularity, that have prompted the highest number of readers to find out more.



Fundsmith Equity

Terry Smith launched this fund as a solo venture in 2010 after a highly successful career in the City as a broker and analyst. It has been the most popular fund on FE Trustnet over the past month.

According to FE Analytics, since its launch it has returned 87.06 per cent compared to an average return in the IMA Global sector of 36.49 per cent and a gain in the MSCI World of 54.02 per cent.

Performance of fund, sector and index since November 2010


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Source: FE Analytics

The £2.5bn fund has the third best return over this period and has done particularly well in 2014 so far with the fourth best return in its sector. The other three top performers are all specialist healthcare funds.

The fund does have 17 per cent in healthcare, an overweight position, but invests most heavily in consumer goods with 52 per cent of the fund in names such as Imperial Tobacco, Pepsico, Domino’s Pizza and Unilever.

Gordon Smith, fund analyst at Killik, says he recommends the fund having closely followed it since its launch.

“We have backed it since launch. It gives you access to some pretty attractive and high growth companies and he [Smith] has done a good job since he launched. He tends to stick with holdings unless something fundamentally changes.”

The fund has an ongoing charges figure (OCF) of 0.99 per cent and is currently yielding 1.05 per cent.



AXA Framlington Biotech

This £431m fund has been one of the best performing in the whole IMA universe over the past three years and also has had a very strong 2014 despite a mostly benign performance from wider equity markets.


Over the past three years, the fund has performed broadly in line with the index with a return of 213.39 per cent compared to a gain of 209.44 per cent from the Nasdaq Biotech index.

Performance of fund and index over 3yrs

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Source: FE Analytics


Managed by Linden Thomson since July 2012, the fund has been highly volatile during this period of rapid growth. High volatility is a characteristic of biotech stocks.

ALT_TAG Chris Wise, managing director of Gemmell Financial Services and an AFI panellist, recently told FE Trustnet that investors should be careful of chasing past performance with high growth funds and that buying a fund in a sector with renowned volatility may be risky.

The fund has an OCF of 0.84 per cent and has no yield stated on its factsheet.



Newton Asian Income

At £5bn, this five crown-rated fund is one of the largest in its IMA Asia Pacific ex Japan sector.

Managed by Jason Pidcock since 2005 the fund has more than doubled in size over two years partly thanks to top quartile returns over three and five years but also because of significant inflows. Over three years it has returned 35.93 per cent compared to an average return in the IMA Asia Pacific ex Japan sector of 24.49 per cent. The index rose 26.07 per cent over this period.

Performance of fund, sector and index over 3yrs


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Source: FE Analytics


IBOSS’s Chris Metcalfe recently told FE Trustnet he had sold out of the fund on behalf of clients over the past 18 months due to worries over capacity constraints.

The fund has an OCF of 0.82 per cent and is yielding 4.36 per cent.




CF Woodford Equity Income

While this £3.3bn fund is both one of the newest in its IMA UK Equity Income sector as well as the only fund of the five featured in this article to not have a three-year track record, being headed by FE Alpha Manager Neil Woodford it has one of the UK's highest profile fund managers at its helm.

Fund research group Square Mile says it offers a compelling investment long-term investors.

“Mr Woodford's investment track record is extremely impressive and though his contrarian nature can lead to periods where investors may require a dash of patience, he has proved time and again that this patience is ultimately a well-rewarded virtue,” the group said.

“Fundamentally, Mr Woodford is focused on producing a positive, not relative, long-term return for investors whilst providing a level of capital preservation, and so this fund should perhaps be judged versus this objective, and not against how the market has done.”

Since the fund was launched it has made 3.90 per cent while the average fund in its sector lost 1.87 per cent and the FTSE All Share fell by 2.88 per cent.

Performance of fund, sector and index since June 2014

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Source: FE Analytics

The fund has an OCF of 0.75 per cent and targets a yield of 4 per cent.



Unicorn UK Income

The death over the summer of this fund’s manager since 2004 - John McClure – has seen Simon Moon and Fraser Mackersie take over in recent months.

The £584m fund is the only one of the five to go through a recent period of underperformance, in part due to its small and mid-cap bias, according to Richard Troue, head of investment analysis at Hargreaves Lansdown, who spoke to FE Trustnet last week.

It has returned 74.2 per cent over the past three years compared to an IMA UK Equity Income sector average of 46.09 per cent and a gain in the FTSE All Share of 37.4 per cent.

Performance of fund, sector and index over 3yrs
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Source: FE Analytics

However, it is almost 4 per cent down on the year while the FTSE All Share is up 0.95 per cent.


Troue says investors should not rush to sell holdings in the fund due to its performance in 2014.

“I’m reasonably relaxed about the recent underperformance of this fund. A smaller and mid-cap bias has contributed to the lacklustre performance and in a better environment for these types of company I would expect performance to improve,” he said.

“The managers have a long-term approach with an emphasis on quality companies with decent management teams. As with any long-term approach there will be periods when it doesn’t quite work or falls out of favour and bold investors might even look to top up at times like this.”

The fund has an OCF of 0.84 per cent and currently yields 5.25 per cent.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.