At the same time the firm published its “Best in Breed” list, which highlights its favourite funds in each sector according to its independent research team.
These could be seen as possible replacements for serial underperformers.
UK equity
The list of top-rated IMA UK All Companies funds includes the likes of Franklin UK Mid Cap, AXA Framlington UK Select Opportunities and Schroder UK Mid 250 – all of which are run by FE Alpha Managers.
Performance of funds vs sector over 3- and 5-yrs
| Name | 3yr returns (%) |
5yr returns (%) |
|---|---|---|
| Liontrust Special Situations | 81.07 | 106.88 |
| Franklin UK Mid Cap | 66.52 | 92.86 |
| BlackRock UK Special Situations | 52.40 | 58.22 |
| AXA Framlington UK Select Opportunities | 48.72 | 53.31 |
| Stan Life Inv UK Ethical | 52.77 | 39.69 |
| Schroder UK Mid 250 | 49.45 | 33.06 |
| IMA UK All Companies | 34.05 | 28.47 |
Source: FE Analytics
However, the standout performer has arguably been the five crown-rated Liontrust Special Situations portfolio, which is run by FE Alpha Managers Julian Fosh and Anthony Cross.
According to FE Analytics, it has beaten the other top-rated funds in the sector over the last three and five years and has been considerably less volatile other both periods, too.
Unsurprisingly, Adrian Frost’s Artemis Income and Neil Woodford’s Invesco Perpetual Income and High Income funds made it onto the top-rated IMA UK Equity Income fund list.
They are joined by Fidelity Moneybuilder Dividend and Threadneedle UK Equity Income, which are managed by FE Alpha Managers Michael Clark and Leigh Harrison respectively.
All of the funds in the IMA UK Smaller Companies elite list are also run by FE Alpha Managers, including the likes of Liontrust UK Smaller Companies, Marlborough Special Situations and Fidelity UK Smaller Companies.
International equity
All but one of the "best in breeds" in the IMA Europe ex UK sector have five FE Crowns, are run by an FE Alpha Manager and have at least £1bn worth of assets under management (AUM).
These include David Dudding’s Threadneedle European Select and Alexander Darwall’s Jupiter European portfolios, which have both returned around 50 per cent over the last three years.
The exception is the five crown-rated Henderson European Focus portfolio, which has just £72m AUM.
The worst sector for dog funds in the recent report was IMA North America. What is more, the sector has only one "best in breed" fund – JPM US.
The £199m portfolio has beaten its sector and its benchmark – the S&P 500 – over three, five and 10 years. However, it has not posted top-quartile returns in any of these time frames.
In the IMA Global Sector, the standout best-in-breed fund is CF Odey Opus, headed up by FE Alpha Manager Crispin Odey.
The £200m fund has beaten both the sector and its benchmark – the MSCI World index – over the last one, five and 10 years. Its returns of 188.84 per cent over the last decade make it a top-quartile performer over that time; however it has been more volatile than both the index and its benchmark.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
In the Japanese equity space, one of the funds listed is GLG Japan Core Alpha.
Jason Hollands, Bestinvest’s managing director of business development and communications, recently told FE Trustnet that he thought the £900m fund could hugely benefit from the new Japanese stimulus measures.
"If you believe there has been a pricing anomaly, then now could be a good time to buy it," he said.
"If you buy a fund that already holds undervalued stocks, then a re-rating would be very beneficial, magnifying any possible returns in the market."
He added: "The fund’s manager – Stephen Harker – has a very, very good long-term track record but has suffered recently because his value strategy has been out of favour."
Emerging markets equity
Almost inevitably, First State and Aberdeen funds make up the majority of Bestinvest’s top-rated emerging market funds. In the IMA Global Emerging Markets sector, First State Global Emerging Markets Leaders, Aberdeen Emerging Markets and JPM Global Emerging Markets are its top picks.
Over the last half a decade, Aberdeen Emerging Markets has returned 92.24 per cent while First State Global Emerging Markets Leaders is up 91.24 per cent. The £1.1bn JPM Global Emerging Markets fund and the sector have returned 33.42 per cent and 29.76 per cent, respectively.
Performance of funds vs sector over 5yrs
Source: FE Analytics
Both the First State and Aberdeen funds also have a lower annualised volatility than the JPM fund and the sector over the period.
It is a similar story in the IMA Asia Pacific ex Japan sector, with Aberdeen Asia Pacific and First State Asia Pacific both making an appearance.
They are joined by the five crown-rated Newton Asian Income and Schroder Asian Alpha Plus funds, which have beaten the Aberdeen and First State portfolios over the last three and five years.
Jason Pidcock’s £3bn Newton Asian Income fund has become a very popular choice with investors recently. FE data shows it has seen a real uptick in inflows, with its size increasing by more than £1bn last year.