It’s been a relatively jubilant week for UK investors, following the news that the price of oil has exceeded the $50 per barrel mark for the first time in seven months due to an increased global demand and supply disruptions.
This, combined with opinion polls showing that the balance between ‘Brexit’ and ‘Bremain’ has tilted towards the latter camp and a “major breakthrough” in regard to Greece’s debt negotiation being reached on Wednesday, has led the FTSE 100 to rise close to 2 per cent since the start of the week.
Across the pond though, news that Donald Trump crossed the threshold of delegates needed to seal his presidential nomination could unsettle markets, given the Republican’s reputation for controversy.
Not wishing to leave things on a sour note here at FE Trustnet though (especially seeing as we’re welcoming in a three-day weekend), we’ve given a run-down of our favourite stories of the week, including a list of the UK equity income ‘all-rounders’ and the top-performing multi-asset funds that aren’t charging you hefty fees.
From all of us, have a brilliant weekend.
The UK equity income funds that tick (just about) all the boxes you can think of
First up is an article from our series on funds that are topping their peer groups for a range of metrics connected to total returns, capital preservation and ability to capture market upside over the five years to the end of 2015, this time focusing on the IA UK Equity Income sector.
Editor Gary Jackson ran a series of filters to see how the popular sector’s members stack up for cumulative five-year returns up to the end of 2015 as well as the annual returns of 2015, 2014 and 2013, annualised volatility, maximum drawdown, downside capture, alpha generation, Sharpe ratio and upside capture.
The fund that came on top in this study was Hugh Yarrow’s £524m Evenlode Income fund, which sits in the sector’s top decile for alpha generation, volatility, maximum drawdown and Sharpe ratio, although it has tended to lag in rising markets.
Performance of fund vs sector and index over 5yrs to end of 2015
Source: FE Analytics
However, the fund is due to leave the IA UK Equity Income sector in the very near future after failing to hit its yield requirement. To see the other UK equity income funds scoring high in the study, have another read of the story.
Are Vanguard’s new active funds piling on the pressure to lower fees?
Index-tracking giant Vanguard announced the launch of four actively managed funds for UK investors this week, promising ongoing charges figures from as low as 0.60 per cent and portfolio management from the likes of Baillie Gifford and Wellington Management.
As Vanguard now has almost $1trn in global active assets under management, this is not a small move by a niche player so reporter Lauren Mason asked around to see if it would add further pressure on the active management industry to lower fees.
One common opinion, however, is that investors need to pay attention to more than just fees and ensure they are buying funds where they are comfortable with the performance profile as well as the costs.
Darius McDermott, managing director of Chelsea Financial Services, said: “I think fees are a very important issue but the whole focus on fees and fees alone is actually becoming slightly overdone now.”
“At the end of the day most people want performance and most performance charts and tables are all net of fees. We do know that fees have an impact on total return, of course they do, but if you look at your performance and it says you’re up 10 per cent it’s already after the fees have been paid.”
Standard Life Investments UK Equity Unconstrained: Should you buy, hold or fold?
News editor Alex Paget put the Standard Life Investments UK Equity Unconstrained fund, which was becoming one of the most popular UK funds before the departure of its manager Ed Legget, under the spotlight to see if investors should hold onto it or look for another option.
Performance of fund versus sector and index under Legget
Source: FE Analytics
The fund is now run by Wesley McCoy, who launched the strategy and ran it for two-and-a-half years before Legget. Although it has had a tough time since the management change, its bias outside of the FTSE 100 and a value tilt have not been suited to conditions this year (Legget’s Artemis UK Select fund is also underperforming).
However, the fund pickers FE Trustnet spoke to were not overly concerned by this bout of short-term underperformance.
Charles Stanley Direct pensions and investment analyst Rob Morgan said: “I think I would stick with it if I held. Standard Life has a team-based approach with proprietary screens that guide them to a so-called ‘winners list’ of stocks, which has historically unearthed good opportunities.”
“Ultimately it is the fund manager that makes the final calls but as an investor you are very much backing the process as well as the individual. Having worked at Standard Life before (and generated strong returns) Wes McCoy is a safe pair of hands for the fund.”
The five top-performing multi-asset funds that aren’t charging you over the odds
As the Vanguard story highlights, fund costs are always under close scrutiny and Lauren Mason has been looking at various Investment Association sector to find top-performing funds with low ongoing charges figures.
Royal London Sustainable World Trust stood out in the IA Mixed Investment 40%-85% Shares sector as it has delivered the highest five-year total return of the peer group (at close to 100 per cent, which is just over double the gain of its average peer) and has one of the lowest OCFs.
The fund has also done well in terms of its risk metrics, having delivered a top-quartile maximum drawdown (which measures the most potential money lost if bought and sold at the worst times) and a top-quartile risk-adjusted return (as measured by its Sharpe ratio) over the same time frame.
Four other funds are highlighted in the piece, including offerings from Kames, Fidelity and Standard Life Investments.
