Net retail sales of funds for the year topped £25.7bn - a more than six-fold increase on the 2008's sales of £3.8bn. This brought the total of funds under management to £480.8bn, up from £361.7bn at the previous year-end.
The momentum is likely to be sustained in the first quarter of 2010, as investors act to ensure their subscription allowance for Individual Savings Accounts (ISAs) is fully utilised before the April 5 cut-off point. It is timely, then, to use Financial Express data to comb the funds universe for funds that could appeal to different investor profiles.
Our first stop is those funds that have shrugged off the adverse conditions of the past year and made returns. The bar was set at a total return of 60 per cent or more, and we can find 183 funds that achieved this. To narrow this down, a further, tougher criterion was added: the fund's volatility had to be below 15 per cent. There were four funds that met these exacting parameters (see the table below).
Total Return Custom table from UK IMA UT and OEICs universe
| Name | 1-yr cumulative performance to last price |
yield % |
Initial charge % |
Annual charge |
1-yr cumulative volatility to last week end |
1-yr cumulative Sharpe to last week end |
| CF - Noble UK Smaller Companies |
66.23 | 0.00 |
4.00 |
1.50 | 12.61 | 5.02 |
| Invesco Perpetual European High Yield |
63.43 | 6.62 | 5.00 | 1.25 | 12.91 | 4.63 |
| New Star High Yield Bond |
62.24 | 6.12 | 4.25 | 1.00 | 10.06 | 6.07 |
| Newton Global High Yield Bond |
60.11 | 9.65 | 4.00 | 1.00 | 9.02 | 6.38 |
Source: Financial Express Data to 26/02/2010
As one might expect, this group leans towards the outer fringes of the investable universe in order to achieve gains of this order. The two Close funds focus on smaller companies, and their results suggest that the managers have shown some skill in identifying those with strong growth potential. JPM and Neptune invest in central and Eastern Europe and the Russian Federation.
With volatility at this level, investors will want to know that the risk is being rewarded, and we can turn to the Sharpe ratio in order to gauge this. It is worth recalling that Sharpe measures the amount of return that has been generated for each unit of volatility, and for each of these funds it is strongly positive.
With that in mind, we can now turn to Sharpe as our criterion for identifying those funds with the best risk/reward relationships as measured by this ratio.
Total Return Custom table from UK IMA UT and OEICs universe
| Name | 1-yr cumulative performance to last price |
yield | Initial charge |
Annual charge |
1-yr cumulative ann. volatility to last week end |
1-yr cumulative Sharpe to last week end |
| Close - Beacon Investment |
135.19 | 0.00 | 5.00 |
1.50 | 26.89 |
4.90 |
| Close - Special Situations |
163.41 | 0.31 | 5.00 | 1.50 | 26.22 | 6.20 |
| JPM - New Europe |
145.00 | 0.05 | 4.25 | 1.50 | 29.74 | 4.73 |
| Neptune - Russia & Greater Russia |
122.02 | 0.00 | 5.00 | 1.75 | 32.59 | 3.55 |
Source: Financial Express Data to 26/02/2010
Total Return Custom table from the UK IMA UT and OEICs universe
| Name | 1-yr cumulative performance to last price |
yield |
Initial charge |
Annual charge |
1-yr cumulative ann.volatility to last week end |
1-yr cumulative Sharpe to last week end |
| AXA Framlington Managed Income |
56.53 | 6.6 |
5.25 |
1 |
7.52 |
7.18 |
| Elite - Fitzwilliam Strategic Bond |
27.84 | 3.6 | 3.5 | 1.25 | 3.85 | 6.44 |
| Newton - Global High Yield Bond |
60.11 | 9.65 | 4 | 1 | 9.02 | 6.38 |
| Close Special Situations |
163.41 | 0.31 | 5 | 1.5 | 26.22 | 6.2 |
Source: Financial Express Data to 26/02/2010
These are not necessarily the highest total returns available - but they are the funds that extract more gain per unit of risk than any others in the IMA universe. And, remembering that the Sharpe calculation has already deducted a notional risk-free rate from the returns, the risk/reward equation does not get much better than this.
So we have a selection of funds, identified by a variety of criteria, for investors to consider: 60 per cent returns at a reasonable level of volatility; the best total returns over the past year; and the best risk-adjusted returns. It is now up to the investor to make a decision.