As investors with a long enough memory will know, markets in the 2000s couldn’t have been more different from the decade that followed it.
The 2010s were a strong decade for strategies with exposure to the technology sector.
But the 2000s were better for natural resources funds as a ‘commodity super cycle’ took hold and demand for raw materials from rapidly growing emerging market economies –China, in particular – soared. Strategies focused on these emerging markets also did well.
Below, Trustnet takes a closer look at the best performing funds of the 2000s to find out how they got on in the following decade.
It should be noted that some strategies, managers and fund names may have changed during the two periods under review.
Source: FE Analytics
The best fund of the 2000s, according to data from FE Analytics, was BlackRock Gold & General with a total return of 684.11 per cent.
During the 2010s, however, the fund made a loss of 5.5 per cent, as the price of the underlying commodities fell.
The fund has been managed by Evy Hambro since 2009 and FE fundinfo Alpha Manager Tom Holl since 2015.
Several of the top-performing commodity funds of the 2000s slipped to losses during the 2010s including JPM Natural Resources (down 17.46 per cent) and BlackRock GF World Mining (down 20.5 per cent).
While the natural resources strategies saw performance drop off during the latter decade, emerging markets funds delivered some respectable returns. Albeit not all countries and regions fared as well.
Latin American equity strategies that dominated the top of performance tables in the earlier decade recorded returns in the double digits, but funds that had a greater Asia focus performed far better.
For example, BlackRock GF Latin American was the fourth best performer of the 2000s with a total return of 445.77 per cent, but made a return of just 18.76 per cent in the 2010s.
Similarly, Scottish Widows Latin American was up by 393.99 per cent in the 2000s but registered a much more modest return of 14.18 per cent in the 2010s.
Asia-focused strategies such as Stewart Investors Asia Pacific fared better, recording a 145.52 per cent return in the 2010s after making a 284.89 per cent gain in the earlier decade.
Two Chinese strategies – Schroder ISF Greater China and Janus Henderson China Opportunities – also stood out, having followed up strong returns in the 2000s with gains of more than 150 per cent in the 2010s.
The different dynamics in play during the 2010s were also beneficial for the worst performing funds of the earlier decade.
As the below chart shows, the 2000s were a tough time to be a Japanese equity manager.
Yet during the 2010s, the strategies saw performance take off significantly as prime minister Shinzo Abe took office in 2012 and introduced the reforms that have breathed life into Japan’s struggling economy. These have seen international investors begin to return after years watching from the sidelines.
Source: FE Analytics
The best performing strategy of the 2010s – a Japanese equity fund – was one of the worst performers of the 2000s.
Legg Mason IF Japan Equity – overseen by manager Hideo Shiozumi since 1996 – made a total return of 701.17 per cent during the 2010s, having made a loss of 67.39 per cent as the second worst performing fund of the 2000s.
Japanese equity funds featured prominently with a number of loss-making funds from the sector, although most came storming back in the 2010s.
There were a number of technology funds at the foot of the 2000s performance table, including the worst performer of the decade, AXA Framlington Global Technology.
After a fall of 68.63 per cent during the 2000s this too surged during the latter decade, making a total return of 408.74 per cent. The fund has been overseen by lead manager Jeremy Gleeson since 2007.
Technology strategies struggled as the dotcom bubble burst during the early part of the century and many of the early internet-focused companies failed to live up to the hype surrounding them. In the 2010s, technology stocks have been at the forefront of the equity market rally led by the FAANGs – Facebook, Amazon, Apple, Netflix and Alphabet’s Google.
As such, many other technology funds were to be found at the bottom of the table in the 2000s, but they delivered some strong returns in the subsequent decade, as the table above shows.