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How are the funds that made the most money in the 2010s performing in 2020?

27 April 2020

Trustnet finds out if the funds that have made strong long-term returns are continuing to top their sectors as markets work through the coronavirus crisis.

By Gary Jackson,

Editor, Trustnet

The funds that made the highest returns of the 2010s have tended to remain at the top of their sectors in a turbulent 2020, Trustnet research shows, although there have been some notable falls to the bottom.

After a bull market that followed 2008’s global financial crisis and lasted more than a decade, 2020 has seen investors hit with brutal falls as the coronavirus pandemic spread around the world and caused many countries to lock down their economies.

Although markets have been grinding upwards since the end of March, most are far below the peaks reached on 19 February. FE Analytics shows that between the start of 2020 and 23 April, the MSCI AC World index was down more than 10 per cent while the FTSE All Share had lost 23.68 per cent.

Performance of indices in 2020

 

Source: FE Analytics, as at 23 Apr 2020

Against this backdrop, Trustnet took the Investment Association funds that generated the highest returns over the 10 years to the end of 2019 and looked at how they were holding up in 2020.

The strategy that had made the most money over the previous 10 years was Hideo Shiozumi’s £854.9m Legg Mason IF Japan Equity fund. It was up 701.17 per cent over the decade – almost 230 percentage points more than the fund that came in second place.

Legg Mason IF Japan Equity has been one of the more volatile members of the Investment Association universe and has posted some heavy maximum drawdowns at times, owing to Shiozumi’s focus on Japanese small- and mid-cap stocks.

However, it has performed relatively well in 2020 so far and made a loss of just 3.66 per cent over the year to 23 April. This keeps it in the top quartile of the IA Japan sector, although it has slipped from first place over 10 years to seventh out of 73 funds in 2020.

The £3bn Polar Capital Global Technology fund, which is managed by Ben Rogoff and Nick Evans, made the second highest total return between 2010 and 2020 and it has held up in 2020, with a 7.6 per cent total return over the year to date.

Technology is an area of the market that has performed relatively strongly over the long run but also over 2020, as locked-down populations turn to online solutions for their remote working, social, entertainment and shopping needs. The MSCI AC World Information Technology index is up 0.31 per cent this year, compared with a 10.32 per cent fall in the wider MSCI AC World index and a 36.30 per cent plunge in global energy stocks.

Candriam Equities L Biotechnology was the Investment Association’s third highest returner in the 2010s and it is up more than 7 per cent during 2020. Healthcare is another sector that is holding up well, thanks to its defensive nature and increased demand during a pandemic; the MSCI AC World Healthcare index has made 4.92 per cent in 2020 to date.

 

Source: FE Analytics, as at 23 Apr 2020

The performance of the 25 funds with the largest returns can be seen in the table above, along with their quartile rankings where appropriate. A good number have managed to hold onto their top-quartile status this year, although losses have been seen across the board.

But there are some that have slipped, such as ASI UK Smaller Companies moving into the second quartile, Merian UK Smaller Companies Focus falling into the third and Fidelity UK Smaller Companies dropping into the bottom quartile.

Trustnet also ran the numbers on a quartile basis (which means that sectors such as IA Specialist, IA Unclassified and IA Targeted Absolute Return were excluded) to see where funds that were top-quartile for the past decade are found in the rankings for 2020.

Of the 377 funds that were in their respective sector’s top quartile over the 10 years to the end of 2019, 142 of them – or 38 per cent – remain in the top quartile for 2020 while 78 (or 20 per cent) are in the second quartile.

LF Lindsell Train UK Equity, Liontrust Special Situations, Jupiter Strategic Bond, TB Evenlode Income, Trojan IncomeRathbone Global Opportunities and Jupiter Merlin Balanced Portfolio are some of the well-known funds that have held onto a first-quartile ranking this year.

However, 75 (or 20 per cent) have slipped into their sector’s third quartile during 2020 and 82 – or 22 per cent – are in the bottom quartile of their peers. JOHCM UK Equity Income, Rathbone Ethical Bond, Man GLG IncomeFranklin UK Mid Cap and Unicorn UK Income are some of those that have fallen into the bottom quartile.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.