Over the last decade, MFM Slater Growth has racked up more weeks making positive returns than any other fund in the IA UK All Companies or IA UK Equity Income sectors, according to data from FE Analytics.
Meanwhile, 49 UK equity funds have made losses during more than 230 weeks out of the last 10 years (or 521 weeks), which is a worse record than the FTSE All Share index.
It is a given that investors shouldn’t buy into a fund with a week-long time horizon but we thought it would be interesting to find out which funds from the two popular sectors have spent the fewest weeks in negative territory.
As mentioned above, MFM Slater Growth takes the top spot with a total of 202 weeks’ worth of negative returns and 319 weeks of positive returns.
FE Alpha Manager Mark Slater has been at the helm of the five crown-rated fund since its launch in 2005. Over this time frame, it has returned 302 per cent compared to its sector average’s return of 121.32 per cent and the FTSE All Share index’s return of 126.83 per cent.
Performance of fund vs sector and benchmark
Source: FE Analytics
In terms of its risk metrics, it is in the third quartile for its maximum drawdown and annualised volatility over the same time frame. This could be because, during negative months, it has fallen particularly hard. While it has indeed achieved many positive periods, a lot of its negative performance has congregated around 2007, 2008 and 2012.
That said, the fact it is in first place out of all its peers in the IA UK All Companies and IA UK Equity Income sectors is no mean feat considering it tends to have a bias towards more volatile mid-caps.
The second fund on the list also invests further down the cap spectrum, although it tends to hold a greater weighting in large-caps.
Richard Penny’s L&G UK Alpha Trust has had just 204 negative weekly returns over the last decade.
The manager also launched the fund in 2005 and, over this time frame, it has returned 228 per cent in total, outperforming its average peer and benchmark by 107.43 and 105.44 percentage points respectively. However, it is in the bottom quartile for its maximum drawdown and annualised volatility, due to suffering particularly badly during those negative periods.
The manager aims to buy stocks that are undergoing a period of transition or have been undervalued by markets. Given that funds with a value or a recovery tilt can be more susceptible to prolonged periods of underperformance, L&A UK Alpha Trust’s position in second place on the list is also impressive.
EdenTree UK Equity Growth and Liontrust Special Situations are in joint third place for only having 207 weeks’ worth of negative returns over the last 10 years.
The former has only been headed up by Philip Harris since September 2015 and Ketan Patel since September 2016.
Since Harris has been at the helm, the fund has had 28 weeks of negative returns out of 60, which is exactly average for its IA UK All Companies sector.
Liontrust Special Situations, however, has been managed by FE Alpha Manager Anthony Cross and Julian Fosh since 2005 and 2008 respectively.
Over the last decade, the fund is in the top decile for its annualised volatility and downside risk ratio (which indicates a fund’s tendency to fall during down markets) and is in the second decile for its maximum drawdown. It has the highest risk-adjusted return, as measured by its Sharpe ratio, within the IA UK All Companies sector.
Over 10 years, the fund has achieved a total return of 221.63 per cent, which is more than triple the returns of its sector average and benchmark over this time frame.
Performance of fund vs sector and benchmark over 10yrs
Source: FE Analytics
The managers adopt their tried-and-tested Economic Advantage process, which focuses on companies with characteristics they deem to be difficult to replicate such as intellectual property or significant recurring business.
While it is able to invest across the cap spectrum and it is essentially a ‘best ideas’ portfolio drawn from the managers’ Liontrust UK Smaller Companies and Liontrust UK Growth funds.
The next two funds on the list specialise in mid-caps. FE Alpha Manager Richard Watts’ Old Mutual UK Mid Cap fund has had 209 weeks of negative performance over the last decade and Andrew Neville’s Allianz UK Mid Cap has had 210 negative weeks.
Old Mutual UK Mid Cap has had Watts at the helm since 2008, which is short of the 10 years we have conducted the study over.
That said, the fund has achieved the third-lowest number of negative weeks over this time frame compared to peers. Over the previous manager Ashton Bradbury’s six-year tenure, it was in the bottom 10 for suffering the greatest number negative weekly returns.
Since Watts has managed the fund, it is in the bottom quartile for its maximum drawdown and annualised volatility, although this is perhaps to be expected given its mid-cap bias and its concentrated portfolio of 41 holdings.
In terms of performance though, it has returned 323.45 per cent over Watts’ tenure compared to its sector average’s return of 145.94 per cent and its FTSE 250 benchmark’s return of 291.4 per cent.
Neville’s Allianz UK Mid Cap fund has been in his tenure since 2004. The fund has an even more concentrated portfolio of 31 holdings, and is in the bottom decile for its annualised volatility and maximum loss over this time frame and is in the ninth decile for its maximum drawdown.
This can mostly be attributed to the fact it does particularly well during rising markets, having suffered during the bear markets of 2008 and 2011.
Performance of fund vs sector and benchmark under Neville
Source: FE Analytics
At the opposite end of the spectrum, the funds to have seen the highest number of negative weekly returns over the last ten years include Aviva Investors UK Equity MoM 2 at 243, Scottish Widows UK Equity Income at 241, and Virgin UK Index Tracking and Halifax UK FTSE 100 Index Tracking both at 240.