Four out of five of the most popular funds in last year’s ISA season are top decile since the new tax year on 5 April 2015 as well as being ahead of their benchmarks, according to research by FE Trustnet.
Looking at data from the Trustnet Direct platform of its best selling funds – by the number of holders – during the flurry of activity between 1 January 2015 and 5 April, commonly known as ISA season, just two out of the five most popular portfolios have lost cash.
Source: Trustnet Direct
The CF Woodford Equity Income, Newton Global Income and CF Lindsell Train UK Equity funds are all in the top decile for performance in their respective sectors as well as having made positive returns since 5 April 2015.
The £8.1bn Stewart Investors Asia Pacific Leaders fund was also top decile in the IA Asia Pacific Ex Japan sector, but is still down 6.96 per cent over what has been a torrid time for this region’s stock markets. By contrast the MSCI Asia ex Japan index is down 12.02 per cent.
The remaining fund of the five most popular is the £545m AXA Framlington Biotech fund, which has fallen 23.14 per cent.
Biotechnolgy has had its worst period for many years due to a host of concerns around the strgenth of the global economy as well as more specific worries over price controls on pharmaceuticals.
Biotech was on course for another strong year until August 2015 when investors started to panic sell, further exacerbated by Hillary Clinton’s comments that she would seek greater price controls on pharmaceuticals should she win the 2016’s presidential election in the US. However, the market has snapped back since somewhat.
The OMX NASDAQ Biotechnology index lost less than the AXA Framlington Biotech fund, being 18.89 per cent down. This fund is therefore the only one of the funds not have beaten its benchmark.
Performance of fund and index since 5 April
Source: FE Analytics
Despite being a big backer of biotech, Neil Woodford did however manage the eighth best performance out of 81 funds in the IA UK Equity Income sector for his very popular CF Woodford Equity Income fund, which is now £8.3bn having taken on £3.2bn of fresh cash in the past 12 months.
The fund returned 1.24 per cent over the period while its average peer has lost 2.61 per cent. The FTSE All Share is down 5.8 per cent.
Headed by FE Alpha Manager Nick Train, the £1.9bn Lindsell Train UK Equity fund did better than Woodford but was still in the low single digits since 5 April 2015. However this is a much stronger performance than the index as well as the sector average.
Performance of funds, sectors and index since 5 April 2015
Source: FE Analytics
The manager was among a number of strongly performing UK funds that invested in a substantial amount of non-UK listed stocks, and mostly fully used the rules allowing him up to 20 per cent of non-UK exposure.
In fact Train told FE Trustnet recently that three of his five best performing stocks in 2015 were from outside the UK, while all five of the worst are listed on the UK stock market.
The manager has garnered a reputation for being one of the top fund managers of recent years in the UK equity space thanks to very strong returns over rolling time periods as well as a buy-and-hold mentality that sees him infrequently buy or sell a stock.
The approach has worked well for Train. He has outperformed in every year since 2008 and has clocked up stellar returns since launching in 2006 thanks to this constant strategy when markets were both rising and falling.
The £4bn Newton Global Income fund was the best peformer of these five funds since the start of the tax year. The current manager Nick Clay took over the fund back in Decemebr 2015 after James Harries, the previous manager of the portfolio, left Newton.
However, like most funds at Newton the fund is ‘team managed’ utilising the firm ‘global thematic’ approach.
It is up 9.34 per cent against an average loss of 3.77 per cent in the IA Global Equity Income sector. The FTSE World index is down 3.21 per cent over the same period.
Performance of fund and index since 5 April 2015
Source: FE Analytics
However, the fund was one of the 60 per cent of funds in the sector to reduce its dividends in 2015 from the previous year.
While previously betting big on defensive stocks, the manager is preparing to move into more cyclical parts of the market. The portfolio had previously been very defensive for some time.