At the start of yesterday’s trading, the FTSE 100 was at 6,915 meaning it was just 15 points below the index’s record closing level of 6,930 – which was posted during the height of the dotcom bubble on 30 December 1999.
There is no guarantee that the record will be broken as opinion is split as to whether the market will keep marching forward and “climb the wall of worry” or whether it will fall back as it has done on many occasions over recent years.
Nevertheless, using data from FE Analytics, we look back at the biggest winners and losers from the UK’s open and closed-ended sectors since the heady heights of the late 1990s.
Given the fact the index is still trading below its historic high, it will come as little surprise that the FTSE 100 – from a price point of view – is down 0.22 per cent since 30 December 1999. However, the graph below highlights just how important the compounding effect of dividends can be as our data shows that, when looking at total return, the FTSE 100 is up 66.95 per cent over that time.
Performance of index’s price and total return since 30 Dec 1999
Source: FE Analytics
Data from FE Analytics also shows that investors would have largely been better off in active rather than passive UK funds.
An equally weighted portfolio of the IA UK All Companies, UK Equity Income and UK Smaller Companies sectors has returned 139.72 per cent while an equally weighted portfolio of the IT UK All Companies, UK Equity Income and UK Smaller Companies sectors has returned 196.56 per cent.
FE data shows 160 of the 230 portfolios which have a long enough track record in those six sectors, or 78.8 per cent, have beaten the FTSE 100 over that time while 131 portfolios, or 64.5 per cent, have outperformed the FTSE All Share’s gains of 89.07 per cent.
However, the second part of that data has survivorship bias as, unlike in the graph above, it doesn’t include poor performing funds which have since been closed.
In terms of the best individual performing funds over that time, five of the top 10 reside in the IA UK Smaller Companies sector.
Source: FE Analytics
As the table above shows, the top performer has been the £875m Marlborough Special Situations fund which has been headed up by small-cap veteran and FE Alpha Manager Giles Hargreave (pictured) since July 1998.
According to FE Analytics, it has returned 603.13 per cent over that time since the FTSE 100’s record high, beating the IA UK Smaller Companies sector average by 415 percentage points and the second best performing fund on the list – Aberforth UK Small Companies – by 113 percentage points.
Our data shows Hargreave’s highly diversified fund – it has 217 holdings – has beaten the sector in 11 out of the last 15 calendar years, including 2001 when it made 2 per cent while the sector posted double-digit losses and 2003 when it doubled the sector with gains of 80 per cent.
Marlborough Special Situations is also top quartile over one, five and 10 years but is third quartile over three years due to its performance in 2013 and 2012, when it could only keep up during those strongly rising markets.
Nevertheless, data from FE Analytics shows the fund has had the best risk-adjusted returns – as measured by its Sharpe ratio – out of every fund in the three UK open-ended sectors over the period in question.
The other four small-cap funds to feature on the list alongside Hargreave’s fund include Aberforth UK Small Companies, Investec UK Smaller Companies, Discretionary UT and Standard Life UK Smaller Companies.
The best performing large-cap fund over that time has been Schroder Recovery with returns of 414.89 per cent.
The £680m fund has been headed up by FE Alpha Managers Nick Kirrage and Kevin Murphy since July 2006 and they focus on bombed out and severely out of favour stocks, which has led the fund to the top quartile of the IA UK All Companies sector over three, five and seven years.
Other all companies funds to feature on the list include GAM UK Diversified, which has been run by FE Alpha Manager hall of famer Andrew C Green since August 1990, and FE Alpha Manager Alex Wright’s Fidelity Special Situations.
The flagship Fidelity fund had been managed by Sanjeev Shah between 2008 and 2014 and before that it was the brainchild of star manager Anthony Bolton.
FE Alpha Manager Mark Barnett’s five crown-rated Invesco Perpetual Income is the only income focused fund to feature on the list with returns of 359.65 per cent. Up until March last year, it had been run by star manager Neil Woodford.
Turning to the closed-ended space and Wright’s Fidelity Special Values trust – which was also previously managed by Shah and Bolton – has been the best performer with returns of 527.1 per cent.
Source: FE Analytics
It is a genuine multi-cap portfolio, as Wright holds 22.3 per cent in the FTSE 100, 36.9 per cent in the FTSE 250, 20.9 per cent in the FTSE Small Cap and the rest outside of the UK market. The manager also has the ability to take short positions in his portfolio.
Wright is joined by three other FE Alpha Managers on the list of best performing trusts: Mark Barnett and his Perpetual Income & Growth Trust, James Henderson and his Lowland Investment Company and Nick Train and his Finsbury Growth & Income trust.
Like in the open-ended universe, the list of top performing investment trusts since the FTSE 100 last broke its record high includes a number of small-cap trusts, with Aberforth Smaller Companies, Invesco Perpetual UK Smaller Companies, Throgmorton, Blackrock Smaller Companies and Althelney all featuring.
However, unlike in the IA universe where the highest returning fund also had the best Sharpe ratio, Peter Spiller’s Capital Gearing trust has had the best risk-adjusted returns in the IT universe.
Spiller, who focuses on capital preservation, has returned 261.05 per cent – placing his trust 16 out of 41 – it has had the lowest maximum drawdown, which calculates the most an investor would have lost if they had bought and sold at the worst possible times, out of any UK trust over that time.
It must be noted, however, that Capital Gearing isn’t a straight UK equity fund as it holds gold, bonds and investment trusts which focus on different parts of the global equity market.
The worst performing UK trust since the FTSE 100 reached its record high is James Barstow’s Aurora Investment Trust which has returned 40.67 per cent over that time. However, as the graph below shows, there have been points over the last 15 years when the trust was outperforming.
Performance of trust and funds versus index since Dec 1999
Source: FE Analytics
Henderson UK Strategic Income has been the worst performing fund out of the three UK sectors over the period as it has lost 28.19 per cent. However, Manek Growth – which recently switched from the UK All Companies to the IA Specialist sector – has eclipsed those losses as it is down 67.19 per cent since the end of 1999.