Some 17 funds in the Investment Association universe posted double-digit returns after the UK’s decision to leave the European Union was revealed on Friday, data from FE Analytics shows, although the average fund in all three UK equity sectors was down 5 per cent or more. 
The FTSE 100 dropped 3.15 per cent on 24 June (representing somewhat of a bounce from its dramatic plunge when the market opened) following the announcement that 51.9 per cent of votes in the UK’s in/out referendum on the EU were cast in favour of leaving the union.
Stock market falls were seen across the globe, with Europe’s Euro Stoxx, Japan’s Topix and the US S&P 500 all falling harder than the FTSE 100, in local currency terms, as investors wondered how the UK’s decision would affect the financial system and pulled risk off the table.
While we appreciate that one day is an incredibly short time frame in the investment world, there will be some wondering where the biggest returns and losses were made on such a historic day.
On a sector level, the UK was the worst performing area of the market. The IA UK Smaller Companies sector posted the worst average return in the Investment Association universe on Friday after falling 5.60 per cent. IA UK All Companies followed with a 5.26 per cent decline while the average IA UK Equity Income fund was down 5 per cent.
At the top of the table, the average IA North American Smaller Companies fund made a 5.83 per cent positive return, aided by the weakening of sterling against the dollar. IA North America was up 5.26 per cent, IA China/Greater China 5.21 per cent and IA Japanese Smaller Companies 4.92 per cent.
But when it comes to individual funds, the best return of the day was made by Angelos Damaskos’ MFM Junior Gold fund, which was up 12.83 per cent. The £11.6m portfolio is built around small and mid-cap companies that specialise in gold mining and it benefited from the jump in safe haven demand for the yellow metal.
Source: FE Analytics
As well as gold funds, bonds were another beneficiary of safe haven flows – as shown by the double-digit return of the Lorenzo Pagani’s Pimco GIS Euro Ultra Long Duration fund.
In fact, almost all of the 35 best performers of the day focused on US equities, gold or global bonds.
If we jump to the bottom of the results table, however, UK funds dominate. The table on the following page shows the 50 Investment Association funds with the worst returns on Friday.
Source: FE Analytics
Given that a large number concerns around Brexit revolve around its impact on the domestic economy, it will come as little surprise that many of the day’s worst performers are mid-cap funds or those with a large allocation to the FTSE 250.
Old Mutual Equity 1, which was down 11.09 per cent and made the day’s biggest loss, is headed by FE Alpha Manager Richard Watts, who specialises in UK md-caps. Watts also runs Old Mutual UK Mid Cap, which is in third place on the list.
More than three-quarters of Old Mutual Equity 1’s portfolio is in mid-caps with over 15 per cent in small-caps, contributing to its sharp fall as investors became more cautious in their outlook for the UK economy.
Schroder UK Mid 250, AXA Framlington UK Mid Cap and Threadneedle UK Mid 250 were other specialist mid-cap funds that found themselves at the bottom of the performance tables on 24 June.
Funds with a value tilt were also near the bottom of the table on Friday as the move away from the riskiest parts of the market turned investors off companies that already have question marks hanging over their heads.
Steve Davies’ Jupiter UK Growth was the second worst performer of the day after falling 11.08 per cent but the likes of CF Miton UK Value Opportunities, Marlborough Special Situations, Man GLG Undervalued Assets and Dimensional UK Value all lost more than 7.5 per cent during Friday’s session.
Following a number of years of underperformance, the value investing style had been on a strong run of late. Whether this is set to continue or Friday marked the start of fresh difficulties for the style remains to be seen.
Not every UK equity fund posted losses on Friday with 13 managing to make a positive return. Few of these are mainstream funds, although some do have assets under management in excess of £200m.
Source: FE Analytics
Every fund in the IA UK Smaller Companies sector made a loss on Friday. Harry Nimmo had the day’s best result after his Standard Life Investments UK Smaller Companies fund fell 3.28 per cent but, on the other hand, Henderson UK Smaller Companies was down 8.77 per cent.
