A mass of geo-political risks and other reasons made investors in global equities less bullish than in recent years – except for one particular market, India, which saw a material reversal of sentiment.
Source: FE Analytics
FE Analytics shows the top performing investment trust of 2014 within the AIC universe with more than £1m in assets is the £43m Ocean Dial India Capital Growth trust, managed by David Cornell since 2010.
It returned 70.07 per cent over the course of 2014 compared to a gain in the MSCI India index of 31.59 per cent.
Performance of trust and index in 2014
Source: FE Analytics
Indian equities have historically been a volatile place to have money with the past 10 years only showing one calendar year – 2013 – where returns or losses in the index have not been in double digits.
For example in 2007 the index gained 70 per cent before falling 50 per cent in 2008, only to gain a further 75 per cent in 2009.
However with the March election of Narendra Modi as prime minister the expectation of a host of economic and investment reforms has caused the country’s equity markets to rally.
Cornell says while volatility has been a historical feature of Indian equities, the election of Modi – as well as the appointment of Raghuram Rajan as central bank governor – is a game changer.
“India is much better placed to weather a tighter global monetary environment. Furthermore, for the first time in the country’s history, there is both the electoral mandate and strong leadership under the helm of Narendra Modi, to create a cleaner political system which delivers long-term economic growth,” Cornell recently said.
“The size of the opportunity on offer to overseas investors, coupled with the depth of managerial talent available in the stock market, presents an exciting chance to take part in a structural long-term growth story that is only at the beginning,” he added.
Top holdings in the trust include one of India’s largest commercial banks – Federal Bank – and property financing company Dewan Housing Finance as well as IT firm Tech Mahindra.
The next two best performing trusts are also focused on India: the £118m Aberdeen New India and £457m JP Morgan Indian trusts, which returned 54.65 per cent and 49.89 per cent respectively.
Performance of trusts and index in 2014
Source: FE Analytics
The Aberdeen trust is run by the firm’s Asian equities team while the JPM trust is co-managed by Rukhshad Shroff and Rajendra Nair.
Another niche, volatile but also rapidly rising part of the global market last year was biotechnology, partly explaining why the International Biotechnology trust is the next best trust on our list.
It has returned 48.16 per cent over 2014 compared to an IT Biotechnology & Healthcare sector average of 39.34 per cent and a gain in its benchmark - the NASDAQ Biotechnology index – of 42.77 per cent.
Performance of trusts and index in 2014
Source: FE Analytics
The trust’s largest holding is Celgene, an American company that manufactures drugs and therapies to treat cancer, which represents 9.8 per cent of the portfolio. It is the largest weight of the index, accounting for 8.53 per cent back in November 2014.
Other top holdings include Gilead and Regeneron Pharmaceuticals, which make up a further 12.5 per cent combined.
The Frostrow Capital Biotech Growth and Frostrow Capital Worldwide Healthcare trusts also feature on the 10 best performers list for 2014, with respective returns of 44.87 per cent and 39.65 per cent.
The Frostrow Capital Biotech Growth trust also has Celgene as its largest holding at around 9.4 per cent, followed by Amgen and Biogen.
Two property trusts also made it onto the list thanks to a strong market for commercial property, particularly in London.
The £821m WorkSpace Group trust, which invests mainly in office and warehouse space in London, returned 47.64 per cent in 2014. The New Europe Property trust made 39.32 per cent.
Vietnamese equities were also a notable area with two trusts that specialise in the country’s equities markets sitting in the table of the 10 best performing trusts.
The Vietnam Holding and VinaCapital Vietnam Infrastructure trusts, which are both domiciled in the Cayman Islands, returned 49.39 and 37.44 per cent in 2014.
The former looks to explore several global mega trends such as urbanisation, agriculture and domestic consumption in Vietnam while the latter – as the name suggests - invests in infrastructure projects and related companies mostly in energy, transport, telecommunications, industrial parks and water/environmental utilities.
