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The best funds you could have bought in February

01 March 2023

Funds invested in UK and European equities beat the rest of the market over the past month.

By Tom Aylott,

Reporter, Trustnet

Funds investing in the UK and Europe delivered the highest returns of the Investment Association universe in February.

The IA Europe Including UK sector was the best performing group overall, delivering an average return of 1.4% throughout the month, whilst IA UK Equity Income came in at a close second with 1.2%.

Other European sectors such as IA European Smaller Companies and IA Europe Excluding UK also landed near the top, with IA UK All Companies and IA UK Direct Property also appeared in the top 10.

Source: FE Analytics

This outperformance may have been partially influenced by the rally in FTSE 100 companies in 2023, with the index climbing 5.1% since the start of the year.

The best performing fund in February was Ninety One UK Special Situations, which was up 5.3% throughout the month, beating its peers in the IA UK All Companies sector by 4.5 percentage points.

This £314m fund managed by Steve Woolley and Alessandro Dicorrado has outperformed its peers over the past one, three and five years, but its 10-year return of 75.7% places it below the sector average.

Total return of fund vs sector over the past five and 10 years

Source: FE Analytics

The second and third best performers were both managed by FE fundinfo Alpha manager, Barry NorrisArgonaut Absolute Return and Argonaut Equity Income were up 4.5% and 4.4% throughout the course of the month.

Another of his funds – Argonaut European Alpha – also appeared in the top 10 after returns leapt 4.1% in February.

The fact that three of his funds were among the best performing funds of the month may be due to an overlap in holdings. Each of them share positions in Glencore, Hafnia and Torm among their top five holding.

Shares in Glencore dropped 5.4% over the past month, but Torm and Hafnia were up a sizable 33.9% and 19.7% respectively.

Share price of Torm, Hafnia and Glencore over the past month

Source: Google Finance

Another European fund, Artemis SmartGARP European Equity, was a top performer in February after it climbed 4.3% throughout the month.

The £140m portfolio managed by Philip Wolstencroft and Peter Saacke was a top-quartile performer over the past year, up 20.5% and beating the IA Europe Excluding UK sector by 10.4 percentage points.

However, it failed to beat its peer group over the long term, with its 19.1% return over the past five years landing it 15.3 percentage points below the sector average.

Total return of fund vs sector over the past one and five years

Source: FE Analytics

The largest fund to make it onto the list was Jupiter UK Special Situations, which has £2.2bn in assets under management.

Returns were up 3.9% throughout February, beating the IA UK All Companies average by 3.1 percentage points.

This fits in with the fund’s long-term trend of outperformance – it delivered top-quartile returns over the past three, five and 10 years.

Over the past decade, Ben Whitmore’s fund is up 118.3%, leading against its peer group by 39.7 percentage points.

Total return of fund vs sector over the past 10 years

Source: FE Analytics

Fellow UK funds, Liontrust UK Micro Cap and TM Redwheel UK Equity Income, were also among the best performing portfolios in February, climbing 3.7% and 3.5% respectively.

The Liontrust UK Micro Cap fund has performed more than twice as well as the IA UK Smaller Companies sector since launching in 2016, up 133% compared its peers’ 61.1% return. However, the fund’s 1.34% ongoing charges figure puts it on the pricier end of the scale.

Source: FE Analytics

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.