Our top studies of 2011

From the debunking of multi-manager myths to stock-specific analysis, our studies have sought to give you a helping hand with your portfolio management.

Here is our pick of the top five studies of 2011:


Funds with high turnover underperform

This October study was one of a number that underlined the importance of sticking to a long-term investment strategy. Data from FE Analytics revealed that UK equity funds which made extensive changes to their holdings in the twelve months to 27 October significantly underperformed those that did not.

A portfolio of the top 10 per cent of UK All Companies funds with the fewest changes to their holdings beat an equivalent portfolio of funds with a high turnover by 2.52 per cent over a one-year period. The disparity in performance in the UK Smaller Companies and UK Equity Income sectors was 2.37 per cent and 2.01 per cent respectively.

The study also revealed that funds with a lower turnover were less volatile.


Mass exodus from struggling flagship funds

Another October study, this highlighted the huge outflows from some of the highest profile funds on the market, including the likes of Fidelity Special Situations, Jupiter Income, Jupiter Financial Opportunities and BlackRock UK Dynamic.

While all four of these industry giants have a stellar long-term record, they were shown to have underperformed their benchmark over a three-year period.

Indeed, many of the vehicles have continued to see mass outflows since the study was compiled. According to FE Analytics, the one-year outflows from Sanjeev Shah’s Fidelity Special Situations fund, for example, have increased from £418m to £534m.


Multi-manager charges cripple performance

This article in June is one of many that revealed the short-comings of expensive multi-manager funds. Our data found that the average multi-manager fund underperformed the average single-manager fund in all three of the IMA’s Managed sectors over a three- and five-year period.

Another study in October also found that the vast majority of multi-manager funds were more volatile than their single-manager counterparts in the short, medium and long-term.

This is not to say, of course, that all multi-manager vehicles have fallen short. FE Trustnet studies regularly highlight the stellar performance of some of these products, including CF Miton Special Situations and the Jupiter Merlin range.


Tracking error hits passives

Back in April, this FE Trustnet study found that investors were missing out on up to 5 per cent a year on returns from passive funds.

Our data revealed that those who put cash into a FTSE 100 tracker in the twelve-months to 5 April could have realised returns of anywhere between 5.82 per cent and 11.52 per cent, depending on the vehicle they had chosen.

The impact of charges was highlighted as one of the biggest contributors to this tracking error, which was explored further in a November study.


All-round winners for your portfolio

This seven-part series highlighted funds that top their respective sectors across a number of different performance measures, including returns, volatility, Alpha and maximum loss.

While a number of high-profile vehicles featured heavily in the results, lesser known boutique funds like IM Matterley Regular High Income, Majedie UK Equity and Liontrust UK Smaller Companies were also flagged up.

A similar series looked at all-round winners in the investment trust universe.


If there are any particular investment themes that you would like FE Trustnet to investigate further in 2012, please leave a comment below, or email the team at editorial@financialexpress.net.