According to a recent FE Trustnet poll, 61 per cent of 1180 respondents said they would not invest in a manager who has not yet experienced a period of crisis.
With this in mind, FE Trustnet looks at some of the equity funds that protected capital most effectively in 2008 and then bounced back quickly – contributing to strong long-term performance. UK Equity Income
Schroder Income Maximiser
While some funds in the IMA UK Equity Income sector lost less in the market crash of 2008, the Schroders Income Maximiser was not only able to limit the downside, it was also able to bounce back strongly when markets improved.
In 2008, the £828.4m Schroder Income Maximiser fund lost 22 per cent, keeping it in the top quartile of the sector. In 2009, it surged ahead by 33.03 per cent, which, while not the highest return that year, is still a top-quartile figure.
Many of the funds that delivered more in 2009 lost nearly 50 per cent of their value in 2008 – something difficult to stomach for the vast majority of investors.
Over five years the Schroders portfolio has returned 43.42 per cent compared with 29.69 per cent from the sector.
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
The fund is primarily composed of blue chips such as AstraZeneca, Vodafone and GlaxoSmithKline. It offers an attractive yield of 6.49 per cent on top of its consistent performance.
Although Thomas See has only headed up the Maximiser fund since 2009, he has been running funds since 2007 through the Schroder ISF European Dividend Maximiser portfolio – meaning he worked through the financial crisis.
The fund requires a minimum investment of £1,000 and carries a total expense ratio (TER) of 1.67 per cent.
The best-performing portfolio over five years is FE Alpha Manager John McClure’s Unicorn UK Income, which has made 106.85 per cent. This fund lost 32.76 per cent in 2008, putting it in the bottom quartile that year.
The recently soft-closed Trojan Income fund lost the least of any fund in the sector in 2008, shedding 12.14 per cent, but underperformed its peers in 2009.
UK All Companies
Royal London UK Mid-Cap Growth
Schroder Recovery
The £110.1m Royal London UK Mid-Cap Growth and the £304.8m Schroder Recovery funds both managed to limit their losses in the tumultuous markets of 2008, then rebounded quickly in 2009.
They are consistent top-quartile performers over the long-term.
The Royal London portfolio lost 23.98 per cent in the credit crunch, with the Schroder portfolio down slightly more, at 27.11 per cent.
The average fund in the sector lost 31.96 per cent.
Both funds came back in 2009, picking up 49.09 and 49.18 per cent respectively, top-quartile figures for the year.
Both funds are top quartile over one, three and five years. The Schroder fund, which has a longer track record, is also top-quartile over 10 years.
In the five years since the credit crisis, the mid cap focused Royal London fund has returned 98.85 per cent, while the sector is up 30.04 per cent and the FTSE 250 index is up 55.13 per cent.
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
Manager Derek Mitchell has only been running the three crown-rated portfolio since 2009 – meaning he missed out on the doldrums of the financial crisis.
However, his investment experience dates back more than 30 years – to 1982 – so he has covered varying market conditions on the portfolios he previously ran at F&C before joining RLAM.
The manager also heads up the Royal London UK Opportunities fund, which he has been running since July 2007.
The Schroders portfolio, which has been headed up by Kevin Murphy and Nick Kirrage since 2006, has made 73.58 per cent over the period, beating both the sector and FTSE All Share.
The four crown-rated Skandia UK Strategic Best Ideas fund lost the least during the crash, shedding 11.62 per cent, but was a bottom-quartile performer in 2009 – owing to the defensive characteristics of the portfolio.
UK Smaller Companies
Marlborough UK Micro Cap Growth
The more illiquid Smaller Companies sector lost more than its UK All Companies and UK Equity Income counterparts in 2008, but has experienced much higher gains since.
The standout portfolio in the sector, in terms of losing the least during the financial crisis and picking up quickly after, belongs to Giles Hargreave.
The FE Alpha Manager heads up the five crown-rated Marlborough UK Micro Cap Growth fund, which lost 37.95 per cent in 2008, while the sector was down 40.54 per cent.
However, the fund picked up 59.7 per cent in 2009, only behind Philip Rodrigs' Investec UK Smaller Companies fund that year.
Hargreave’s extensive experience has helped the fund to returns of 102.6 per cent over five years, double the 51.17 per cent from the sector.
Performance of fund vs sector over 5 yrs
Source: FE Analytics
The Newton UK Smaller Companies fund lost the least in the sector in 2008, at 23.76 per cent.