Greece, as so often has been the case this year, has dominated the news this week.
While the IMF has confirmed that Athens has an extended deadline to repay the €1.6bn owed this month until the end of June, the Greek government must somehow find a way to either pay the full amount or face the proverbial boot out of the eurozone.
The implications of a ‘Grexit’ are likely to be negative for risk assets, though most industry experts view this potential period of heightened stress as a type of “short-term pain for a long-term gain.”
The debt negotiations have helped the FTSE 100 have a negative week, with the blue-chip index now trading beneath the 6,800 level. Elsewhere though, the recent rout in government bond markets seems to have come to an end as yields have once again started to fall over the past seven days.
It has been a good week for the FE Trustnet team as well, as a number of study ideas derived from our access to shed loads of data have come to fruition and newsflow within the industry has increased. With that in mind, here is a selection of our favourites.
From all of us here at FE Trustnet, have a lovely weekend.
Revealed: What your UK fund's income payments really look like
We start with news editor Gary Jackson’s article on dividend distributions, which led our equity income day on Thursday.
FE Trustnet has long held the belief that funds’ income histories are unnecessarily murky and therefore we started a campaign last year highlighting the need for greater transparency surrounding dividends.
This has chimed with many in the industry and Square Mile in particular, who have started producing income tables on their factsheets in their ‘Academy of Funds’. Using tables from Square Mile and after craftily building his own, Jackson took a closer look at how some of the most popular UK equity income funds have performed from an income distribution view.
Trojan Income’s dividend history
Source: FE Analytics
A personal favourite is the chart for Trojan Income, just look how it has increased its pay-out in each of the last 10 calendar years.
Woodford’s first year: How CF Woodford Equity Income has got on
Also as part of our equity income day, reporter Daniel Lanyon took an in-depth look at the now £6.2bn CF Woodford Equity Income fund which celebrated its one year anniversary this week.
Maybe unsurprisingly, it has been the top performing fund in the IA UK Equity Income sector over that time.
“He has got on bloody well,” Mark Dampier, head of research at Hargreaves Lansdown, said.
“You had all those so-called fund experts writing a load of piffle beforehand. It has clearly had a great start. The bid for AstraZeneca really started the whole thing rolling. He was always going to be up there.”
“Parts of the media and other commentators are just looking to shoot him down. When anyone is doing the best at something it is great sport to try and knock them down. The truth is like for any other fund manager: there will be times when things are tougher. Neil has been near the bottom of the tables before, in 2012 for example. But that is the nature of proper active management.”
Should you buy Julie Dean’s new UK fund?
One of the main pieces of industry news this week was that Julie Dean’s new TM Sanditon UK fund will launch later this month.
Dean has built up a strong and loyal investor following as a result of her work on the Cazenove UK Opportunities fund, though following the group’s acquisition by Schroders, things didn’t work out as well.
Therefore, now she is back in the sector, reporter Lauren Mason asked the experts whether investors should consider her new fund.
AXA Wealth’s Adrian Lowcock said: “I fully expect [Dean] will continue to deliver on her long-term track record”.
Patrick Connolly, head of communications at Chase de Vere, was slightly more cautious.
“We want to see her producing the goods with this new fund before we start using it. There are no guarantees she will do as well in her new environment,” he said.
Funds that have completely dominated their sectors: UK All Companies
Next up was a study conducted by senior reporter Alex Paget, which will be the first in an ongoing series.
To highlight the crème de la crème of active fund managers, he screened to see which funds had been top quartile over 10 years, were outperforming over one, three and five years, had outperformed in at least seven of the last 10 calendar years and were top quartile for maximum drawdown, downside risk and risk-adjusted returns over the last decade.
Only three funds made the grade from the highly competitive IA UK All Companies sector; namely Majedie UK Focus, Jupiter Growth & Income and Invesco Perpetual Income.
The five crown-rated Majedie UK Focus fund has been the stand-out winner from a performance point of view as it has outperformed in nine of the last 10 calendar years.
Source: FE Analytics
Given that performance and the fact it is still less than £600m in size, we asked the experts why it wasn’t more widely held by investors in an article later in the week.
Not such a shambles… Fidelity China trust up 78% since launch
To kick start the week, head of FE Trustnet content Josh Ausden asked why star manager Anthony Bolton’s former Fidelity China Special Situations Investment Trust is still seen as a failure by some, even though it’s well ahead of its MSCI China benchmark since launch and has doubled investors’ money over the past three years.
He noted how it has almost been a journalist’s go to conclusion on Bolton that the manager, who had become a household name in the UK equities, had made a major mistake by moving out of his comfort zone and taking on a new market.
Performance of trust and index under Bolton
Source: FE Analytics
“To judge any fund over three years is pushing it, but to write off a geared Chinese investment trust is harsh – particularly one that is run by a contrarian manager who is fighting against a plummeting market,” Ausden wrote.
“Emerging markets should always be viewed as a long-term investment, which means 10 years-plus, but Bolton's style led even his UK and European funds to underperform over significant periods earlier in his career.”
“The criticisms of the manager are even more irrational when you consider his term in full. Contrary to what many think, the trust was more than 9 percentage points ahead of its benchmark when Bolton retired in March last year. In spite of this fact, the consensus view remains that the manager’s reign was a failure.”
Top-rated SIPP funds to maximise your pension pot
Over on Trustnet Direct, Anthony Luzio took a closer look at the Accumulator portfolio, put together by the analysts on the FE Research team.
This portfolio, made up of seven funds, is suitable for a SIPP investor who wants to maximise the amount of money in their pension pot. Because it takes on more risk to maximise returns, it is only suitable for people who have a time horizon of 20 years or more.
The previous article in the series looked at Trustnet Direct’s Income Generator portfolio, which aims to provide a regular income without eroding the original capital investment. This portfolio is suitable for people who have already retired.