Brown Advisory US Smaller Companies topped the list of best-performing funds in the IA universe in the first half of 2019, with gains of 32.26 per cent.
Best performing funds in H1 2019
Source: FE Analytics
The fund’s managers Christopher Berrier and George Sakellaris use a bottom-up process to identify inefficiencies in the small cap market. They hold a concentrated portfolio of companies that deliver above-average growth, due to sound management teams and favourable competitive positioning.
While the fund’s gains in the first half of the year have been spectacular, it is no stranger to outperformance: it has made 507.52 per cent over the past decade compared with gains of 399.77 per cent from its Russell 2000 Growth index and 358.62 per cent from the IA North American Smaller Companies sector.
It is $454m in size and has ongoing charges of 0.93 per cent.
Another fund run by the management team of Berrier and Sakellaris – Brown Advisory US Mid-Cap Growth – finished in second place, with gains of 31.74 per cent. The fund invests 80 per cent of its assets in companies with a market cap of $1.5bn or more. It does not have the track record of its small cap-focused sister fund, however, having only launched in April 2017.
Brown Advisory US Mid-Cap Growth is $172m in size and has ongoing charges of 0.75 per cent.
Another fund focused on the US is New Capital US Future Leaders which finished the first half of the year in sixth place.
Meanwhile, another two funds on the list which have at least 60 per cent of their assets invested in the US – Aubrey Global Conviction and Robeco Global FinTech Equities – placed fourth and fifth.
This trend is not surprising given that IA North American Smaller Companies and IA North America were the first and third best performing sectors over this time, respectively, with gains of 21.85 and 18.58 per cent. In second place was IA Technology & Telecommunications, which is dominated by US stocks, at 70.76 per cent of assets.
Best performing sectors in H1 2019
Source: FE Analytics
Pictet Russia Index was the third best-performing fund in the first half of the year, with gains of 31 per cent. As its name suggests, this is a passively managed fund that aims to track the performance of the MSCI Russia index. The $47.1m fund has ongoing charges of 0.52 per cent.
The strong performance of Russia helps to explain Aberdeen Eastern European Equity’s position in 10th place, with gains of 29.29 per cent. It has 53 per cent of its assets invested in the world’s largest country.
Another, broader-based European fund also made the list: Threadneedle Pan European Focus. The strategy, run by Frederic Jeanmaire, aims to deliver capital growth through a concentrated portfolio – for example, its top-10 holdings account for 46.8 per cent of assets.
IA Europe ex UK, IA Europe inc UK and IA European Smaller Companies were the fifth, sixth and seventh best-performing sectors over the six-month period in question.
The other two funds in the top-10 were LF Ruffer Gold and TM Cavendish AIM.
LF Ruffer Gold, which finished in seventh place with gains of 29.42 per cent, aims to achieve capital growth over the long term by investing principally in gold and precious metal-related companies within the mining industry. It has been aided by the rally in gold, which is up 10.08 per cent year to date.
The £108m TM Cavendish AIM fund, run by veteran FE Alpha Manager Paul Mumford, aims to deliver long-term growth, predominantly by investing in companies listed on the Alternative Investment Market.
Unlike the other funds on this list, it has not been able to rely on a tailwind from its underlying sector – while it has made 29.4 per cent this year, the AIM index is only up by 7.87 per cent.
At the other end of the table, the market rally meant the list of worst performers over the quarter was dominated by funds that use hedge fund-like strategies, such as derivatives – VT Garraway Absolute Equity (formerly City Financial Absolute Equity), Oxeye Hedged Income and BMO Global Equity Market Neutral were rooted to the bottom with losses of 36.93, 25.1 and 16.74 per cent, respectively.
Worst performing funds in H1 2019
Source: FE Analytics
Garraway Capital Management LLP took charge of City Financial Absolute Equity in March after the fund was suspended and City Financial collapsed.
On the subject of fund suspensions, another theme among the worst performers this year is the management of Neil Woodford. His gated LF Woodford Equity Income fund was the fifth worst performer with losses of 12.39 per cent, while Omnis Income & Growth, which he managed for most of this year, was the fourth worst performer, down 14.24 per cent.
LF Woodford Income Focus was the eighth worst performer, with losses of 8.73 per cent.