This year has seen plenty of attention focused on the large funds that are struggling to make decent returns, but some large funds such as Fundsmith Equity, CF Lindsell Train UK Equity and Jupiter European are having a much better time of it.
The summer months saw Neil Woodford come under the spotlight after a series of stock-specific problems hampered his £8.4bn CF Woodford Equity Income fund. And as FE Trustnet pointed out in September, many other giant equity funds were having a difficult 2017.
CF Woodford Equity Income is still in the IA UK Equity Income sector’s bottom decile for the year to date after posting a 0.77 per cent loss. FE Analytics also shows that 28 funds with assets of more than £1bn are in the bottom decile of their peer group this year, including Invesco Perpetual Income, Trojan Income, M&G Global Dividend, CF Ruffer Total Return and Investec UK Special Situations.
However, that’s not to say all giant funds are struggling this year. When we updated the figures, we found that 46 funds running in excess of £1bn are in the top decile of their respective sector for 2017 total returns.
Performance of fund vs sector and index over 2017
Source: FE Analytics
The chart above shows the return made by the best performer of all the £1bn+ funds – Frank Yao and Lihui Tang’s £1bn NB China Equity fund, which is the second highest returner of the IA China/Greater China sector this year with a 53.71 per cent gain.
NB China Equity’s strong returns haven’t only been made in 2017 as, while it was bottom quartile last year, it was in the sector’s top quartile during both 2014 and 2015. This means the five FE Crown-rated fund is currently the highest returning IA China/Greater China member over three and five years.
Despite its large size, the fund may not be the most familiar name to UK investors as some don’t put a great deal of emphasis on more specialist sectors such as IA China/Greater China. However, as the table below shows, several household names can be found in the list of the top-decile giant funds.
This table only shows the top 25 highest returners from the total list of £1bn-plus funds.
One of the highest profile on there is FE Alpha Manager Terry Smith’s Fundsmith Equity fund, which with assets of just under £13bn is the largest member of the IA Global sector.
Fundsmith Equity, which holds five FE Crowns, has made almost 21 per cent over the year to date but this top-decile performance is by no means a one-off. FE Analytics shows the fund is currently top decile over one-, three- and five-year periods, after beating both its average peer and its MSCI World benchmark in five of the past six fund calendar years.
Source: FE Analytics
Terry Smith isn’t the only household name on that table, however.
The £4.9bn Jupiter European fund is the largest in the IA Europe ex UK sector and has established a strong track record on the back of manager Alexander Darwall’s approach. It is in the peer group’s top decile over one, three, five and 10 years.
The FE Invest team said: “Darwall has built up an impressive track record in European equity investing, and this strategy and style of buying high-quality global companies has now weathered a number of market environments.
“The fund could sit well as a core European equity holding, should investors believe that more globally oriented, higher-growth companies will continue to outperform a more balanced approach.”
Likewise, Nick Train’s £4.5bn CF Lindsell Train UK Equity fund is the tenth biggest member of the IA UK All Companies sector and one of the most closely watched UK equity funds. It’s another with a strong track record, being the sector’s fifth-best performer over 10 years and sitting in the top decile over three and five years.
However, Square Mile Investment Consulting & Research said investors should not focus on the short-term performance of the fund: “Over the years the strategy has generated impressive returns but investors would be foolish to ignore the longterm nature of the strategy. This fund may best suit investors who have little interest in the monthtomonth and yeartoyear performance of their investments but seek attractive returns over very long time periods.”
The table above only highlights the 25 best performing funds of the 46 £1bn-plus funds to make top-decile returns over 2017 so far. Several others that have proven very popular with both private and professional investors can be found outside of it.
Performance of funds during 2017
Source: FE Analytics
Standard Life Investments UK Equity Income Unconstrained, which is managed by Thomas Moore, appears in 26th place after making 13.95 per cent this year. The £1.3bn fund was the IA UK Equity Income sector’s worst performer in 2016 but was in its top quartile for each of the three years preceding this.
The £1.6bn TwentyFour Dynamic Bond fund, run by Gary Kirk, Eoin Walsh, Mark Holman, Felipe Villarroel, Pierre Beniguel and Robert Arnold, can also be found further down the list after making 8.1 per cent this year.
There’s also a giant passive fund in the top decile of its sector. The £1.2bn Vanguard UK Inflation Linked Gilt Index fund has been the second highest returner in the IA UK Index Linked Gilts peer group with a 1.92 per cent total return.