The FE Crown Fund Ratings system is a quant-based scheme designed to highlight funds that have demonstrated superior performance and consistency on a risk-adjusted basis, relative to their peer group. 

Here are five of the most notable that have undergone a significant downgrade in the latest update:


Close Special Situations – 5 Crowns to 1 Crown

Deryck Noble-Nesbitt’s small cap-focused Close Special Situations portfolio had a terrific run in the 2009 and 2010 recovery, delivering 330.22 per cent over the 24-month period. 

In spite of the fund’s extreme volatility, its risk-adjusted return during this time was second to none in its IMA UK Smaller Companies sector, with a Sharpe ratio of 4.08. 

However, the fund endured a difficult 2011, losing 14.48 per cent compared with -9.04 per cent from its sector average. 

So far, 2012 has been even worse – according to FE data, it has lost 14.22 per cent, underperforming its sector by a massive 23.54 per cent. As a result, the fund has slipped down the three-year table. 

Performance of fund vs sector over 3-yrs



Source: FE Analytics

This decline in performance has seen the fund lose its maximum five-crown status. Even worse, it now has just the minimum one crown to its name. 


Smith & Williamson Global Gold & Resources – 5 Crowns to 2 Crowns 

Gold equities have suffered in the last 12 months or so, significantly underperforming the gold price.

Of the seven gold portfolios in the IMA universe, those with a small to mid cap focus have found it particularly tough going, including Robert Lyon’s Smith & Williamson Global Gold & Resources fund. 

According to FE data, the fund is down 34.78 per cent over a one-year period, with the likes of BlackRock Gold & General and Investec Global Gold protecting much more effectively against the downside. 

Performance of gold funds over 1-yr



Source: FE Analytics

The £61.5m fund is still top of its peer group over three years, with a return of 49.95 per cent, although it has been more volatile than most of its competitors.  

In a recent interview with FE Trustnet, Hargreaves Lansdown’s Richard Troue said the fund could be set to benefit from the latest round of quantitative easing in the UK. 


BlackRock Cautious Portfolio – 4 Crowns to 1 Crown

Adam Ryan’s £968m BlackRock Cautious Portfolio has beaten its IMA Mixed Investment 20-60% Shares sector over five years, but over both one and three it has underperformed, albeit with slightly less volatility. 

Ryan protected effectively against the downside in 2008, but was unable to repeat the trick in 2011, when he lost 2.48 per cent. 


Jupiter Fund of Investment Trusts – 5 Crowns to 2 Crowns

The Jupiter Fund of Investment Trusts – a £98m portfolio that invests principally in closed-ended funds – has also gone from five to two crowns.

According to FE data, the fund had a very strong 2009 and 2010, but again has suffered a reversal in the last 18 months or so.

It is still up versus its IMA Global sector over a three-year period, but over five it has underperformed by almost 15 per cent. 

Year-on-year performance of fund and sector

	2011 returns (%)	2010 returns (%)	2009 returns (%)	2008 returns (%)
Jupiter Fund of Investment Trusts	-16.24	28.62	41.33	-38.64
IMA Global	-9.27	15.78	22.95	-24.32

Source: FE Analytics

The fund has a stellar 10-year record, but has fallen behind its biggest rivals such as M&G Fund of Investment Trust and F&C MultiManager Investment Trust in recent years. 

Richard Curling took over from Patrick Harrington in January 2012. 


Schroder US Smaller Companies – 4 Crowns to 1 Crown

Jenny Jones’ Schroder US Smaller Companies portfolio is a favourite with IFAs who want exposure to the region; however, it has underperformed its Russell 2000 benchmark in three of the last four years and has failed to match the index so far in 2012. 

As a result, it has fallen short of its IMA North American Smaller Companies sector average by 13.8 per cent over three years, and has only marginally outperformed over five.