Since the UK electorate voted to leave the EU three years ago, uncertainty has continued to dog the domestic market and economy.
While equities around the world have surged ahead on the loose monetary conditions in place following the global financial crisis, UK stocks have struggled to make headway.
As the below chart shows, the FTSE All Share index has made a total return of 30.34 per cent over the past three years, while the US blue-chip S&P 500 index has risen by 69.88 per cent – in sterling terms – and the MSCI Europe ex UK index is up 45.03 per cent.
Performance of indices since Brexit
Source: FE Analytics
It’s not just equities that have suffered: sterling has also fallen by around 16 per cent against both the euro and US dollar over the same time, increasing some costs (but also providing an opportunity for exporters).
Three years on and there is still little clarity on Britain’s future relationship with the EU, as politicians attempt to unravel more than 40 years of integration.
Several hurdles have made negotiations difficult and no deal has yet to receive the backing of the UK parliament. This has led to the resignation of prime minister Theresa May, paving the way for a ‘hard Brexit’ successor from her Conservative party.
Performance among UK equity managers and sectors has been mixed. IA UK Smaller Companies has emerged as the best performer of the three main UK equity peer groups, having made an average total return of 39.36 per cent.
The IA UK All Companies sector – the largest in the Investment Association universe – has made a 26.02 per cent return, while the average IA UK Equity Income fund is up by just 19.67 per cent.
Below FE Trustnet takes a closer look at some of the best- and worst-performing strategies since Brexit.
The top-20 best performers are dominated by smaller companies strategies, although there are some standout performers from the IA UK All Companies sector.
The best-performing strategy since the referendum is the TM Cavendish AIM fund, overseen by investment veteran and FE Alpha Manager Paul Mumford. The five FE Crown-rated fund has delivered a total return of 110.76 per cent during the past three years from its portfolio of stocks listed on the Alternative Investment Market (AIM).
Source: FE Analytics
There are several other notable small-cap strategies including the £415.2m, five FE Crown-rated Jupiter UK Smaller Companies fund, managed by Richard Curling since April, which has returned 78.68 per cent.
Also standing out from its peers is the £365.1m, five FE Crown-rated Merian UK Smaller Companies Focus fund, managed by Nick Williamson. It has made a total return of 71.56 per cent.
The best-performing strategy that is not focused solely on small caps is MI Chelverton UK Equity Growth, which is up by 69.68 per cent. While it can invest across the market-cap spectrum, the £343.4m fund has a greater bias to smaller companies.
Top performers from outside the small-cap space include quality strategies such as the £1.1bn CFP SDL UK Buffettology fund, overseen by FE Alpha Manager Keith Ashworth-Lord, which is up by 64.23 per cent. Nick Train’s £7.1bn LF Lindsell Train UK Equity fund is up by 57.4 per cent (his Aviva Investors UK Equity MoM 1 mandate has done even better, making a return of 62.12 per cent).
Other notable performers include MFM Bowland (managed by Hargreave Hale’s Leon Shuall), Gerard Callahan’s Baillie Gifford UK Equity Alpha, and Mark Slater’s Slater Recovery.
While there are few loss-making funds among the worst performers, it is one of the industry’s best-known investors that takes the bottom spot.
Neil Woodford’s LF Woodford Equity Income fund sits squarely at the foot of the table, having made a loss of 19.69 per cent since 23 June 2016.
The fund has hit the headlines more recently as investors have clamoured to withdraw their money due to underperformance and exposure to unlisted companies.
“Investors have not only lagged the gains made by the broad UK market, but have had to suffer the ignominy of actually losing a fifth of their investment,” said Adrian Lowcock, head of personal investing at Willis Owen.
Source: FE Analytics
The L&G UK Alpha Trust is the second-worst performer over the past three years, with a 6.18 per cent loss. The fund has been managed by Rod Oscroft since last year but was previously overseen by Richard Penny before his departure to CRUX Asset Management.
Also at the bottom are several funds managed by Neil Woodford’s successor at Invesco, Mark Barnett. The FE Alpha Manager’s Invesco UK Strategic Income (down 4.63 per cent) Invesco High Income (up 1.1 per cent) and Invesco Income (up 2.01 per cent) funds sit at the foot of the table.
Other loss-making strategies include Julie Dean’s TM Sanditon UK fund (down 1.6 per cent) and the £1.1bn Jupiter UK Growth fund managed by Steve Davies (down 0.81 per cent).