The high level of volatility since 2007 has made it increasingly difficult for funds to consistently outperform; the four vehicles make up less than 2 per cent of the 256 UK All Companies with a long enough track record.
However, a handful of managers have managed to beat their peer group in both rising and falling markets.
Year-on-year performance of funds from 2007 to 2011
| Name |
2011 |
2010 |
2009 |
2008 |
2007 |
| Lindsell Train - CF Lindsell Train UK Equity |
0.7 |
30 |
34.86 |
-25.76 |
2.24 |
| Cazenove - UK Opportunities |
-0.34 |
20.09 |
34.49 |
-23.29 |
2.07 |
| AXA - Framlington UK Select Opps |
-1.17 |
26.94 |
33.92 |
-29.53 |
3.71 |
| AXA - Framlington UK Growth |
-6.9 |
18.81 |
33.92 |
-30.54 |
8.52 |
| IMA UK All Companies |
-7.67 |
17.53 |
30.4 |
-31.96 |
1.85 |
Source: FE Analytics
FE Alpha Manager Nick Train’s CF Lindsell Train Equity fund has the best record for returns overall, beating all of its competitors in 2009, 2010 and 2011. The fund has cumulatively returned 34.01 per cent over a five-year period, outperforming its sector average and FTSE All Share benchmark by 35.93 and 28.02 per cent respectively.
Train’s fund is also the least volatile of the four by some distance. According to FE Analytics data, it has an annualised volatility of 16.54 per cent over a five-year period, compared with 18.17 per cent from its sector average.
It should be noted, however, that the fund has a minimum investment of £500,000, so is unsuitable for the everyday retail investor. Many of these may want to look at Train's closed-ended vehicle, Lindsell Train Investment Trust, instead.
Performance of funds vs sector over 5-yrs
Source: FE Analytics
The second-best performer of the four – Cazenove UK Opportunities – has returned 26.03 per cent over this period. It has a minimum investment of £1,000.
While the £195m portfolio’s high exposure to cyclicals led to strong performance during the 2009 and 2010 recovery, it also managed to protect against the downside more effectively in 2008 and 2011.
Speaking to FE Trustnet back in June, Julie Dean, who co-manages the fund with Steve Cordell, said the portfolio had taken on a more defensive stance.
"This has been a jobless recovery with very little consumptive growth. With quantitative easing drawing to a close, we have now become more defensive," she explained.
This has boded extremely well for the fund; according to FE Analytics data, Cazenove UK Opportunities lost 0.34 per cent in 2011, compared with 7.67 per cent from its sector average.
Nigel Thomas’ £2.74bn AXA Framlington UK Select Opportunities fund is perhaps the highest-profile of the four, and the only one with more than £1bn assets under management (AUM). It also has a minimum investment of £1,000.
Although funds in the UK All Companies sector have a range of investment objectives and focuses, it is fair to say that the vast majority aim to beat their peer group.
None of the four have beaten the FTSE All Share in each of the last five years, although AXA Framlington UK Select Opps, CF Lindsell Train UK Equity and Cazenove UK Opportunities have beaten the index every year with the exception of 2007.
In the third instalment, FE Trustnet will examine the most consistent funds in the IMA Global sector. The first study in the series found that only two UK Equity Income funds have beaten their sector average in each of the last five calendar years.