Jupiter UK Special Situations, Standard Life Investments UK Equity Recovery and UBS UK Equity Income are among some of the funds that hold more than 10 per cent of their portfolios in the top-performing post-Brexit stocks.
Data from Hargreaves Lansdown shows that three months on from the EU referendum result blue-chips such as Fresnillo, Glencore and Anglo American have seen their prices rise by more than a third.
10 top-performing FTSE 100 stocks since referendum results
Source: Hargreaves Lansdown
“The last three months have seen a resurgence in the fortunes of the mining sector, thanks to a continuing rise in commodity prices and a weakening pound,” senior analyst Laith Khalaf said.
“Companies with international earnings have done quite nicely out of Brexit, with the likes of AstraZeneca, HSBC and Burberry benefiting from their global footprint.”
Given this information, FE Trustnet looked at the funds across the UK equity sectors to find out which ones hold at least 10 per cent of their portfolios in these stocks.
From these, we decided to take a closer look at the four which have also outperformed the FTSE All Share index over this time frame. While they have indeed done well since the referendum result was announced, it must be noted that a number of the below funds have struggled over the medium term.
Standard Life Investments UK Equity Recovery
First up is Standard Life Investments UK Equity Recovery, which holds a total of 11 per cent of its portfolio in the 10 top-performing post-Brexit FTSE 100 stocks - it currently has 5.5 per cent in Glencore and a further 5.5 per cent in Anglo American, according to its most recent factsheet.
Since the referendum result was announced, the £41.5m fund has returned 12.84 per cent, which is almost double the return of its sector average. While the fund isn’t benchmarked against a specific index, it has outperformed the FTSE All Share by 3.81 percentage points over this time frame.
Performance of fund vs sector and index since referendum
Source: FE Analytics
The fund, which has been headed up by David Cumming since 2009, predominantly invests in mid- and large-cap UK stocks with a recovery story. A vast majority of the portfolio is in financials, consumer services and basic materials stocks although it also has smaller weightings in industrials, consumer goods and oil & gas stocks.
While Glencore and Anglo American are the fund’s second and third-largest holdings, it also holds large weightings in the likes of Barclays, Premier Foods and Aviva as part of its 36-stock portfolio.
2016’s returns mean that SLI UK Equity Recovery is now outperforming both the FTSE All Share and its sector average over one, three and five years, making up for some of the peer group’s worst returns in 2015 and 2014.
In terms of its risk metrics, it is in the bottom decile for its downside risk (which measures potential to lose money during falling markets), maximum drawdown (which measures the most potential money lost if bought and sold at the worst possible times) and its annualised volatility over this time frame, suggesting it may not be suited to those who are more risk-averse. It is in the third quartile for its risk-adjusted returns, as measured by its Sharpe ratio.
Standard Life Investments UK Equity Recovery has a clean ongoing charges figure (OCF) of 1.02 per cent and yields 1.48 per cent.
The second fund on the list is Jupiter UK Special Situations, which has been managed by Ben Whitmore since 2006.
It has an 11.9 per cent weighting in the 10 top-performing post-Brexit FTSE 100 stocks – the fund has 4.7 per cent in HSBC, 3.7 per cent in Smiths Group and 3.5 per cent in AstraZeneca.
Since the referendum result was announced, Jupiter UK Special Situations has returned 10.93 per cent, outperforming its FTSE All Share benchmark and its sector average by 1.9 and 4.03 percentage points respectively.
Performance of fund vs sector and benchmark since referendum
Source: FE Analytics
It has also performed well over longer time frames, having found itself in the top quartile for its total returns over one and five years as well as over three and six months.
Over the last decade, it has achieved a top decile return of 140.03 per cent compared to its sector average’s return of 78.26 per cent and its benchmark’s return of 80.11 per cent.
It is also in the top quartile for its downside risk ratio, maximum drawdown, Sharpe ratio and annualised volatility over the same time frame.
The fund has a concentrated portfolio of 40 stocks which are selected using two main quantitative screens – the first looks at stocks which are undervalued relative to their long-term history and the second identifies stocks which offer both high capital returns and low valuations.
Jupiter UK Special Situations has a clean OCF of 0.77 per cent and yields 2 per cent.
Next up is UBS UK Equity Income, which is just £2.2m in size but is available on most investment platforms. The 47-stock fund has a 13.5 per cent weighting in the post-Brexit large-cap top-performers, given that it holds 5.5 per cent in HSBC, 4.3 per cent in Anglo American and 3.7 per cent in Glencore. It also holds 7.9 per cent in BP, 5.4 per cent in GlaxoSmithKline and 5.1 per cent in Barclays.
Since Brexit was announced, the fund has returned 10.06 per cent, which is a 103 basis point outperformance of its FTSE All Share benchmark and a 3.32 percentage point outperformance of its average peer.
Performance of fund vs sector and benchmark since referendum
Source: FE Analytics
The fund is headed up by Steven Magill and, over his three-year tenure, it has outperformed its benchmark by just over 100 basis points but has underperformed its sector average by 5.35 percentage points with a total return of 26.33 per cent.
In terms of its risk metrics over this time frame, it is in the bottom quartile for its downside risk, maximum drawdown, Sharpe ratio and maximum drawdown.
In the fund’s latest factsheet Magill states that he has continually moved from a more defensive stance into riskier assets after the Brexit vote as global markets have continued to rally.
“UK economic releases and the Bank of England's liaison reflected the immediate negative impacts of the Brexit vote on the UK,” he said.
“In response, the bank rate was cut by 25bps to 0.25 per cent and various quantitative easing measures were implemented. The bank's GDP growth forecast for 2017 was downgraded from 2.3 per cent to 0.8 per cent, with declines in government spending and net trade continuing to have a negative impact.”
UBS UK Equity Income has a clean OCF of 1 per cent and yields 3.9 per cent.
Elite Charteris Premium Income
The final fund on the list is Elite Charteris Premium Income, which has been managed by Ian Williams and Nick Taylor since its launch in 2009.
The fund is just £11m in size. It holds 13.6 per cent in the top-performing post-Brexit blue-chips – its list of top 10 holdings includes Fresnillo at 6 per cent, BHP Billiton at 4.4 per cent and HSBC at 3.2 per cent.
Over this time, it has marginally outperformed the FTSE All Share with a total return of 9.37 per cent – this is an outperformance of its average peer in the IA UK Equity Income sector of 2.63 per cent. Unlike the other funds on the list, however, it is benchmarked against the FTSE 100, which it has actually by 68 basis points.
Performance of fund vs sector, benchmark and index since referendum
Source: FE Analytics
While the fund has more than doubled the return of its sector average over the last year, it has significantly underperformed over three and five years, providing less than half the returns of its average peer over these times. It made bottom quartile returns in 2015, 2014, 2013 and 2012.
It is also in the bottom quartile for all the previously mentioned risk metrics over three and five years.
Elite Charteris Premium Income has a clean OCF of 1.34 per cent and yields 1.39 per cent.