The Q3 2017 FundWatch survey revealed that only 9.6% (109) of the 1,129 funds in the 12 major market sectors delivered above average returns over the last three years.
This compares to 11.5% that did so at the end of Q2 2017.
The most consistent sector on this measure was the IA UK Smaller Companies sector with 21.7% of funds, while the IA UK Equity Income sector was the least consistent at 1.3%.
Of the 1,129 funds, only nine (0.8%) were able to consistently deliver top quartile returns over three years as at the end of Q3 2017. Seven of the 12 sectors failed to secure any top quartile funds, while the IA Global Bond sector secured 2.5%.
Kelly Prior, investment manager in BMO Global Asset Management’s multi-manager team, said: “Building on the previous quarter, the number of funds generating consistent returns continues to deteriorate.
“Over nine in 10 funds failed to consistently generate above average returns over a three-year period, with vicious sector rotations and gyrating yield curves creating a lack of consistency from funds.
“Our survey shows that the last three years have rewarded the brave, although the investment backdrop is not an easy one to navigate as we live in curious times with volatility eerily absent.”
The survey also revealed that the IA Smaller Companies sector was the strongest performer of the UK equity sectors rising 5.2%. The IA UK Equity Income sector was the back of the pack rising 1.2%.
