Technology index-trackers and a handful of actively managed global and US strategies dominate the list of funds that have tripled investors’ money over the past five years, according to data from FE Analytics.
Some investors choose to give funds at least five years to deliver investment returns, giving them enough time to recover from any unexpected market downturns.
During the good times it allows investors to benefit more from the effect of compounding returns, which in a consistently high-performing fund can very quickly become meaningful.
As the below table shows, there have been a select few funds that have managed to triple investors’ money (make more than 200%) over the past five years.
Out of the 4,251 funds across all the Investment Association’s sectors, there were 25 that managed to achieve a return of 200% or more.
Source: FE Analytics
More than half of the above strategies were technology funds, while the rest were made up of North American and global funds. There was one energy fund: a clean energy passive exchange-traded fund (ETF) that tracks the S&P Global Clean Energy index.
This was BlackRock’s iShares Global Clean Energy UCITS ETF, which invests in companies involved in clean energy production or equipment globally.
Although it has delivered a 200% return over the past five years, it has seen most of its gains in the past two years amidst a backdrop of increased demand from investors for funds that incorporate environmental, social and corporate governance (ESG) factors.
Similarly, the share prices of clean energy companies – which are seen as crucial to the transition to net zero – have rallied significantly over this time period.
This could partly explain why the highest performing fund on the list was the UBS Luxembourg Selection Active Solar fund, which returned 371% over the period.
Run by Pascal Rochat and Arnaud Chambaud, this fund focuses on investing in companies in the solar energy sector. It is highly concentrated, with just 24 holdings, split across the entire photovoltaics (solar panel) value chain.
Although listed solar companies have delivered moderate returns over the past year, they experienced a surge during the pandemic – with many rising as much as 300% during 2020.
Elsewhere in the list, the Baillie Gifford American fund also topped the performance charts. It has more than quintupled an original investment made a half-decade ago.
Run by Gary Robinson, Tom Slater, Kirsty Gibson and Dave Bujnowski, the managers’ early investments in companies such as Amazon, Netflix and Tesla propelled the fund’s performance during the pandemic.
Over the past year however, the fund’s returns have lagged that of its peers as well as the broader S&P 500 index.
Another notable fund in the list was the Morgan Stanley US Growth fund, headed up by FE Alpha Manager Dennis Lynch. This was one of the three funds that have more than quintupled investors’ money over five years.
The growth-orientated fund has benefited from its heavy allocation to US technology companies, where over the past year it has built up meaningful positions in more mid-cap technology companies.
Unlike the technology indices or indeed the broader S&P 500 index, it is vastly underweight the large-cap technology giants such as Microsoft, Alphabet or Amazon.
The Multipartner SICAV Baron Global Advantage Equity fund however, which also featured in the list above, still holds large positions in many of the US tech giants.
Run by Alex Umansky, a former manager of the Morgan Stanley Opportunity fund, he places a focus on companies that can grow and maintain sustainable competitive advantages.
Elsewhere in the list there were several passive ETFs, most of which were technology-focused. Some of these included the iShares S&P 500 Information Technology Sector UCITS ETF, the L&G Global Technology Index Trust and the Xtrackers MSCI World Information Technology UCITS ETF.
Over the past five years, technology companies have experienced a boon for their goods and services, which was accelerated by the Covid pandemic.
Many of these ETFs track indices which are heavily weighted to the biggest global technology companies like Apple, Microsoft and Nvidia, which have all experienced sales booms over the past few years.
Other passive ETFs that featured were those tracking the Nasdaq 100 index, which is made up of the biggest non-financial companies listed in the US.
Like the world technology indices, most of the Nasdaq’s constituents are technology firms, but there are also some health care and biotechnology stocks that have boosted the returns from the index in recent years.