The major talking point in the industry this week was the first majority Conservative government Autumn Statement in more than 20 years – though, in truth, Chancellor George Osborne had very little to say about the fund management world. 
It included a U-turn on the controversial tax credit cuts and a reaffirmed commitment to austerity, but further tinkering to the pension system (a stalwart of recent statements) was noticeable in its absence.
However, for a full run down, FE Trustnet covered the key events and what they mean for investors and savers.
Elsewhere, outlooks for the year ahead have been flying in and (as has so often been the case over recent months) the market seems fixated with China’s immediate future and the impending decision on US interest rates.
Therefore, it comes as little surprise that the FTSE is likely to end the week flat having witnessed some ups and downs.
However, we’ve had an interesting week at FE Trustnet thanks to our research based articles and we’ve also started up a few new series. Here we round up a selection of our favourites.
From everyone here, have a cracking weekend!
Is now the time to overhaul your equity funds?
One of the major themes developing within the fund management industry is a potential shift from growth to value, with many market commentators telling us that the latter-style will be best suited to the conditions of the next few years.
In this article, news editor Alex Paget wrote how growth stocks have completely dominated value stocks over the past five years.
The reasons for the trend have been simple – since the financial crisis investors have preferred the perceived safety of cash generative companies with clean balance sheets and reliable earnings and, on top of that, those types of shares have been the hunting ground of tourist fixed income investors who have been forced by central banks to take higher levels of risk for yield.
Source: FE Analytics
However, given how well they have performed and with the possibility of higher interest rates, a number of commentators said now may be the time to shift out of quality growth funds and into more towards ‘deep value’ funds.
“There is a risk, having done so well, that – to use Nick Train’s terminology – these type of funds go to sleep for a while. I’m not suggesting that this is going to be some sort of cataclysm for these funds, but on the other side of that you have to think how badly value has done.”
After that article, we looked at five value funds from around the world for investors who are considering rejigging their portfolios.
The perfect funds to hold alongside CF Woodford Equity Income
We started a new series of articles this week whereby we take a widely-held and popular fund and ask the experts which portfolios dovetail nicely with it for investors who want differing outcomes.
Senior reporter Daniel Lanyon kicked us off with arguably the most recognisable fund – CF Woodford Equity Income which has already surged to more than £7bn despite the fact it doesn’t yet have a two year track record.
It was also a good fund to start off the series given many investors hold it simply because it is managed by Neil Woodford.
Therefore, Lanyon looked at funds that offer a different style which can be blended with CF Woodford Equity Income to create a smoother return profile and, for those who want a diversified income stream, he looked at the funds which generate dividends from different parts of the market.
These included the likes of Artemis Capital and Unicorn UK Income.
Why Troy Trojan is still worth holding onto
Reporter Lauren Mason spoke to FE Alpha manager and CEO of Ingenious Asset Management Guy Bowles this week, who holds a 5.2 per cent weighting in Troy Trojan in his Global Growth fund.
Lyon’s perma-bear attitude towards investing has meant the fund is popular among cautious investors, but some are starting to reconsider as a result of its bottom-quartile performance over three and five years.
Bowles, however, uses the fund across a number of his risk-adjusted portfolios as well as in his own fund, and says that the fund is worth investing in despite its underperformance.
“It almost falls into the absolute return category. The manager is very clear that he is trying to deliver a real return in all market conditions. He’s completely transparent in what he owns, we can get a copy of his entire portfolio, and it’s very liquid,” he explained.
“He has a number of things in there that hedge against significant negative outcomes in the markets. He has a big cash position, he has a big gold position, he has a big index-linked position, he has a number of things in there that are likely to protect us on the downside.”
The UK income funds that have consistently rewarded long-term investors
Editor Gary Jackson dug into the IA UK Equity Income sector this week to see if any of its members have managed to make long-term top-quartile returns for their investors with a degree of consistency.
By looking at funds’ five-year quartile rankings over rolling quarterly periods going back to the start of 2005, he found that the top performers were JOHCM UK Equity Income and Unicorn UK Income – which were in the first quartile for each of the 21 periods examined in the research.
Source: FE Analytics
Unicorn UK Income is heavily invested in the small-cap part of the market, which has helped it to outperform its average peer over the long term by a wide margin. Over 10 years, it’s the sector’s best performer with a return of more than 200 per cent.
JOHCM UK Equity Income’s focuses on dividends, as the managers believe this is the truest indicator of a business’ financial health and potential. It is also one of the sector’s highest returning members over the past decade.
Take another look at the article to see how consistent other members of this popular sector have been.
Why there will be no commodities rebound in 2016
Commodities have been in something of a bear market since 2011, with the S&P GSCI Commodity index down more than 50 per cent since April of that year.
While this has attracted bargain hunters who are hoping to make a quick profit when the market rebounds, Heartwood’s Jade Fu says such investors are likely to continue to be disappointed next year.
The investment manager highlighted large stockpiles of oil and said oversupply of other commodities is likely to be a major theme in 2016 as well.
She also pointed out that although the slowdown in China is not as bad as was originally feared, it is likely to depress the price of copper and other materials until 2017 as well.
However, she said that one trend many analysts highlighted as a reason to be negative on commodities next year – an increase in US interest rates – may already be priced in.
