Jupiter Merlin Worldwide Portfolio, M&G Global Basics and GAM Global Diversified are some of the global equity funds that have witnessed the fewest loss-making three-year periods since the start of the millennium, research by FE Trustnet shows.
In recent articles, we showed that UK equity funds such as Trojan Income, CF Lindsell Train UK Equity and Fidelity Special Situations have consistently avoided making losses over three-year periods and now we turn our attention to the IA Global and IA Global Equity Income peer groups.
Global equity funds have historically performed poorly when compared with the market, with FE Analytics showing that the average IA Global member has lagged the MSCI AC World index by more than 40 percentage points over the past decade with a 92.68 per cent total return.
Performance of sector vs index over 10yrs
Source: FE Analytics
Only 26 per cent of funds in the IA Global sector have made a higher return than the index on a 10-year view while the peer group has been hit with more negative months than the index and has made a slightly higher maximum loss in the last decade.
Our study – which looked at the rolling three-year returns over 57 quarterly periods starting 1 January 2000 to 31 December 2002 and ending 1 January 2014 to 31 December 2016 – found that the MSCI AC World has been in negative territory in 14, or 24 per cent, of these periods. The largest three-year loss experienced in this time as 45.05 per cent.
The average fund in the IA Global sector, meanwhile, also endured 14 negative three-year periods with the biggest loss being 44.91 per cent; the IA Global Equity Income sector came off worse with 16 loss-making periods and a biggest loss of 50.96 per cent.
The table below reveals the 34 funds (out of the 67 with a track record covering all 57 periods) that have had fewer loss-making periods than the MSCI AC World index. The table shows the number of three-year periods when the fund posted a loss, the proportion of 57 periods spent in negative territory and the biggest loss seen during the whole time frame.
Source: FE Analytics
As can be seen, two funds have avoided making losses in all but four of the 57 three-year periods: Carmignac Investissement and SKAGEN Global.
Of the two, Carmignac Investissement – which has been managed by Edouard Carmignac since launch in January 1989 – has posted the smaller maximum three-year loss at just 6.93 per cent. Indeed, this is the smallest maximum three-year loss of all the 67 with a sufficient track record; the fund makes use of a hedging strategy to protect capital in difficult markets.
The €5.1bn fund has outperformed its average peer and is broadly in line with its benchmark over the past 10 years when it comes to total return but it must be noted that it has fallen into the bottom decile over one, three and five years.
However, the list of funds does include a number that are ahead of the MSCI AC World index over 10 years as well as shorter time frames.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
Baillie Gifford International, which is managed by Charles Plowden, Malcolm MacColl and Spencer Adair, tops the table after making 184.30 per cent over the past decade. It has also beaten the index and is in the top quartile of its peers over one, three and five years.
Orbis Global Equity, Fidelity Global Focus and Stewart Investors Worldwide Leaders are other examples of funds that have posted fewer loss-making three-year periods than the index while outperforming it over three, five and 10 years.