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European sector finishes top in FE Crown Rating study | Trustnet
Trustnet / News & research / European sector finishes top in FE Crown Rating study

European sector finishes top in FE Crown Rating study

29 January 2012

While the eurozone is facing a torrid time, the flexibility of many funds invested in the region has allowed them to outstrip their peers.

By Anthony Luzio

Reporter, FE Trustnet

The IMA Europe including UK sector has more top-ranked funds than any other, a study of FE Crown Ratings* shows.

Twelve of the sector’s 42 funds – or 28.57 per cent – achieved a Five Crown rating, compared with 22.22 per cent from its closest competitor, IMA Asia Pacific inc Japan, and 18.18 per cent from IMA Technology & Telecoms in third place. A Five Crown rating is awarded to the top 10 per cent of funds across the IMA universe.

All three sectors, however, have a relatively low number of funds. Excluding IMA Unclassified, the average sector in the IMA OEIC and Unit Trust universe has 71 funds, but IMA Technology & Telecoms contains just 11 funds, while IMA Asia Pacific inc Japan has just nine.

Of the sectors that have the average number of funds or above, IMA Europe excluding UK has the second-highest proportion of funds with Five Crowns; 13 out of 111, or 11.71 per cent. It was just pipped by IMA Specialist, with 11.83 per cent, while IMA UK All Companies finished a distant third, with 8.94 per cent.

Commenting on the results of the study, Rob Gleeson, analyst at FE, said: "The added flexibility afforded IMA Europe including UK funds has allowed them to avoid the worst of the turmoil in Europe by seeking sanctuary in UK assets."

"All through the credit crunch and again during the recent periods of market stress we have seen funds with the most flexibility and lack of constraint to the given benchmark do well. These funds are able to preserve capital and sit out the worst parts of the market which, if done well, has a bigger influence on Crown Ratings than funds that manage to outperform a rising market."

At the other end of the scale, IMA Flexible Investment had the highest proportion of funds with a single crown, with 41 out of 137, or 29.93 per cent. 

More than one-quarter of funds in seven other sectors have just a single crown; UK Smaller Companies, UK Index-Linked Gilts, UK Gilt, UK All Companies, Global, IMA Sterling Strategic Bond and IMA Europe ex UK.

*FE’s Crown Fund Ratings are a quantitative measure based on historical performance relative to an appropriate, targeted benchmark, chosen by FE.

Rebalanced quarterly, the ratings take into account Alpha, volatility and consistently strong performance.

The top 10 per cent of funds are awarded five crowns, the next 15 per cent receive four crowns and each of the remaining three quartiles are given three, two and one crown respectively.

Sectors

OI Europe including UK Equities OI Europe excluding UK Equities OI Asia Pacific including Japan Equities OI Specialist OI UK All Companies OI UK Gilts OI UK Index - Linked Gilts OI UK Smaller Companies LF Europe including UK Equities LF Europe excluding UK Equities LF Asia Pacific including Japan Equities LF Specialist LF UK All Companies LF UK Gilts LF UK Index - Linked Gilts LF UK Smaller Companies PN Europe including UK Equities PN Europe excluding UK Equities PN Asia Pacific including Japan Equities PN Specialist PN UK All Companies PN UK Gilts PN UK Index - Linked Gilts PN UK Smaller Companies UK Psv UK Gilts UK Psv Index-Linked Gilts UT Flexible Investment Retail UT Europe Including UK Retail UT Europe Excluding UK Retail UT Asia Pacific Including Japan Retail UT Global Retail UT Sterling Strategic Bond Retail UT Specialist Retail UT UK All Companies Retail UT UK Gilts Retail UT UK Index Linked Gilts Retail UT UK Smaller Companies Retail IT Global IT UK Smaller Companies UT Flexible Investment UT Europe Including UK UT Europe Excluding UK UT Asia Pacific Including Japan UT Global UT Sterling Strategic Bond UT Specialist UT UK All Companies UT UK Gilts UT UK Index Linked Gilts UT UK Smaller Companies OS Active Managed OS Europe Including UK OS Europe Excluding UK OS Asia Pacific Including Japan OS Global OS Sterling Strategic Bond OS Specialist OS UK All Companies OS UK Gilts OS UK Index - Linked Gilts OS UK Smaller Companies

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.