IA China/Greater China has proved to be the best open-ended sector for delivering double-digit annualised returns over rolling 10-year periods, according to research by FE Trustnet.
The sector achieved this feat in eight of the decade-long periods finishing at the end of each of the past 10 calendar years.
IA Global Emerging Markets finished second in the study, delivering double-digit annualised returns in six of the past 10 rolling decade-long periods, while IA Asia Pacific Excluding Japan managed it in five.
The only two decade-long periods in which IA China/Greater China failed to deliver double-digit annualised returns were those that finished at the end of 2016 and 2017, where the figures stood at 8.72 per cent and 7.53 per cent respectively.
The sector’s average annualised growth rate over the periods in question is 11.37 per cent.
Sectors that delivered 10%+ annualised returns over highest number no. of 10yr periods
| Name | Annualised returns (%) 31/12/1998 to 31/12/2008 | Annualised returns (%) 31/12/1999 to 31/12/2009 | Annualised returns (%) 31/12/2000 to 31/12/2010 | Annualised returns (%) 31/12/2001 to 31/12/2011 | Annualised returns (%) 31/12/2002 to 31/12/2012 | Annualised returns (%) 31/12/2003 to 31/12/2013 | Annualised returns (%) 31/12/2004 to 31/12/2014 | Annualised returns (%) 31/12/2005 to 31/12/2015 | Annualised returns (%) 31/12/2006 to 31/12/2016 | Annualised returns (%) 31/12/2007 to 31/12/2017 | Average annualised returns (%) | Periods of 10% + annualised returns |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| IA China/Greater China | 11.81 | 11.9 | 14.21 | 11.68 | 14.68 | 11.18 | 11.99 | 10.04 | 8.72 | 7.53 | 11.374 | 8 |
| IA Global Emerging Markets | 10.46 | 9.69 | 14.88 | 12.75 | 15.86 | 11.51 | 10.23 | 4.7 | 5.8 | 5.01 | 10.089 | 6 |
| IA Asia Pacific ex Japan | 8.58 | 7.73 | 12.28 | 10.5 | 14.24 | 11.14 | 11.22 | 7.74 | 8.41 | 7.47 | 9.931 | 5 |
Source: FE Analytics
Of its five funds with a track record long enough to be included in the study, two – Janus Henderson China Opportunities and Schroder ISF Greater China – made double-digit annualised returns in nine of the 10 rolling decade-long periods, while the other three managed it in eight.
Janus Henderson China Opportunities and Schroder ISF Greater China delivered average annualised returns of 13.37 and 13.05 per cent over the periods in question.
Of the four decade-long periods in which IA Global Emerging Markets failed to make double-digit annualised returns, three of these finished at the end of the past three calendar years.
The sector’s average annualised growth rate over the period in question is 10.1 per cent.
Of its 17 funds with a track record long enough to be included in the study, 11, or 65 per cent, made double-digit annualised returns in at least five of the 10 decade-long periods.
Aberdeen Emerging Markets Equity made double-digit annualised returns in eight of these periods, with an average figure of 14.85 per cent. However, it has struggled more recently and is a bottom quartile performer over the past one, three and five years, although it is still a top-quartile performer over 10. It is now soft-closed and comes with an initial charge of 2 per cent.
Another four funds in the sector made double-digit annualised returns in seven of the 10 decade-long periods.
IA Asia Pacific Excluding Japan’s average annualised growth rate over the period in question is 9.93 per cent.
Of the 27 funds in this sector with a track record long enough to be included in the study, 18, or 67 per cent, made double-digit annualised returns in at least five of the 10 decade-long periods.
Stewart Investors Asia Pacific and Fidelity Institutional South East Asia beat this benchmark in every single one of the past 10 decade-long periods, delivering average annualised returns of 15.41 and 12.59 per cent respectively.
Again, however, Stewart Investors Asia Pacific is soft-closed and comes with a hefty initial charge of 4 per cent. Fidelity Institutional South East Asia is available on a limited number of retail platforms.
Looking at the past decade, there are six sectors that have delivered double-digit annualised returns to today’s date: IA Technology & Telecommunications, IA North America and the small cap versions of Japan, North America, UK and Europe. These are the only small cap sectors in the IA universe.
Sectors that have delivered 10%+ annualised returns over 10yrs
| Name | Annualised returns over 10yrs (%) | No. of funds with 10yr record | No. of funds with 10%+ annualised returns | % of funds with 10%+ annualised returns |
|---|---|---|---|---|
| IA Japanese Smaller Companies | 13.73 | 6 | 6 | 100 |
| IA Technology & Telecommunications | 14.56 | 11 | 10 | 91 |
| IA North American Smaller Companies | 13.39 | 9 | 8 | 89 |
| IA North America | 11.48 | 79 | 69 | 87 |
| IA UK Smaller Companies | 11.58 | 41 | 35 | 85 |
| IA European Smaller Companies | 10.13 | 21 | 11 | 52 |
Source: FE Analytics
IA Japanese Smaller Companies saw the highest proportion of funds make double-digit annualised returns over the 10-year period, at 100 per cent.
There was a relatively large variance in returns between the best and worst performers in this sector – Baillie Gifford Japanese Smaller Companies, which is top, delivered annualised returns of 17.91 per cent, while bottom-placed BlackRock GF Japan Small & MidCap Opportunities delivered 12.04 per cent.
Next up is IA Technology & Telecommunications with 10 of its 11 funds, or 91 per cent, reaching this benchmark.
The variance here was far greater – top-placed Polar Capital Global Technology delivered annualised returns of 18.6 per cent over this time, more than triple the 5.34 per cent figure of bottom-placed Fidelity Global Telecommunications.
Just one fund in IA North America Smaller Companies with a 10-year track record failed to reach double-digit annualised returns over this time, yet at 9.9 per cent the underperformance of Legg Mason IF Royce US Smaller Companies was marginal.
Of the six sectors, more than 80 per cent of funds in five of them managed to hit the double-digit target; the one exception was IA European Smaller Companies, where only 55 per cent managed this feat.