The equity market drop-off at the end of 2018, blamed in large part on the Federal Reserve’s tightening of monetary policy, rounded off a sore year for active funds.
However, some of the funds that delivered fourth-quartile returns last year have managed to bounce back with top-quartile performance in 2019 so far.
FE Trustnet previously looked at which funds across the IA UK All Companies, IA UK Equity Income and IA UK Smaller Companies sectors that achieved the greatest ‘bounce back’ in 2019.
Performance of indices from the start of 2018
Source: FE Analytics
Here we look at the funds that have achieved this feat in the IA North America, IA Global and IA Global Emerging Markets sectors.
Performance of IA Global funds
Source: FE Analytics
Seven funds made the bounce-back list in the IA Global sector, recovering from fourth-quartile performance in 2018 to deliver top-quartile returns so far this year.
The poorest performer on the list in 2018 was Pictet Clean Energy, managed by Xavier Chollet and Christian Roessing.
The $575.4m fund focuses on companies that are contributing to lowering carbon emissions or using cleaner, renewable energies in their production process.
It made a loss of 13.54 per cent last year, but has rebounded with gains of 25.5 per cent so far in 2019.
The best-performer from the list this year is another Pictet fund – Pictet Global Environmental Opportunities, which has made 30.09 per cent, following losses of 11.92 per cent in 2018.
Much like Pictet Clean Energy, Pictet Global Environmental Opportunities is a thematic fund, but with a focus on companies that deal with clean energy, agriculture, forestry and “other areas of the environmental value chain”, determining which businesses meet the criteria for inclusion via a screening process routed in the Planetary Boundaries framework.
However, one are where the funds differ is in medium-term performance: Pictet Global Environmental Opportunities has made 89.98 per cent over this time, compared with 82.7 per cent from the MSCI World index and 66.54 per cent from its sector. Pictet Clean Energy made just 42.45 per cent.
Performance of IA North America funds
Source: FE Analytics
Moving onto the IA North America sector and there were only three funds that rebounded from fourth-quartile performance last year to a top-quartile position this time around.
The Royal London US Growth Trust, managed by James Clarke, had the worst performance last year of the funds that made the list, losing 10.64 per cent.
Its return this year was just 0.62 percentage points behind the 28.96 per cent made by ASI American Equity Unconstrained, putting it top of the funds on this list.
However, both of these funds have significantly underperformed the MSCI USA index over the medium and long term.
The Royal London fund aims to generate growth over five years or more. It has ongoing charges of 0.91 per cent.
ASI American Equity Unconstrained is £91.6m in size and has ongoing charges of 0.91 per cent.
Performance of IA Global Emerging Markets funds
Source: FE Analytics
Of the three sectors examined in the study, IA Global Emerging Markets had by far the highest number of funds that made big losses in 2018 and then recuperated in a significant way.
One fund stands out as losing the most in 2018 and making the most in 2019: AB Emerging Markets Growth Portfolio, which ended 2018 with losses of 21.28 per cent; but turned it around with gains of 19.26 per cent so far in 2019.
Managed by Alliance Bernstein’s emerging markets growth team, the $857.6m fund aims to produce long-term growth by investing in companies with “strong fundamentals that offer compelling growth potential, emphasising sustainable, long-term growth rather than more volatile, cyclical growth”.
The fund has made 46.38 per cent over five years, compared with 39.77 per cent from its sector.
Another fund worthy of mention is Threadneedle Global Emerging Market Equity, which has made 19.08 per cent so far this year.
Although the £301.2m fund is predominantly invested in large caps, manager Ilan Furman has no size constraint. He can also invest freely regardless of country or industry, focusing instead on the companies he believes have the best prospects for share price growth.
The fund has made 32.37 per cent over the past five years. It has ongoing charges of 0.92 per cent.