Odey Absolute Return has climbed to the top of a “diverse” crop of winners in August in an impressive turnaround for the fund after being battered during the Covid sell-off.
Run by James Hansbury and Jamie Grimston, who are both partners at Crispin Odey’s boutique, the £431.8m fund generated returns of 13.2% over August. The next best performer, Aptus Global Financials, was up 11.9%, followed by the LF Access Long Term Global Growth Investment fund run by Baillie Gifford’s James Anderson which returned 11.6%.
Fairview Investing consultant Ben Yearsley notes there was “no clear trend” among last month’s winners which included US, emerging markets and India focused funds.
“This is the most diverse it has been in months,” Yearsley said. “If you look at the top 20, it is even more diverse with Japan, Asia and UK smaller companies as well.”
Odey Absolute Return fund stages a comeback
Odey Absolute Return was the only fund from the IA Targeted Absolute Return sector to grace the list of top performers last month.
The average absolute return fund rose 0.8% last month, according to data from FE Fundinfo. Odey Absolute Return’s gains were almost twice as high as the next strongest performer in the sector, Liontrust GF European Strategic Equity which was up 7.2%.
Retail investors have been abandoning absolute return funds in droves for two years, pulling out a combined £11.4bn over 24 straight months, according to stats from the Investment Association, as high profile funds in the sector like Aberdeen Standard Investments Global Absolute Return Strategies (Gars) and Invesco Global Targeted Returns have struggled to produce decent returns.
Investors’ patience was further tested during the Covid crisis as only eight funds delivered a positive return during the biggest drawdown period from 20 February to 23 March.
Odey Absolute Return’s stellar performance last month marks a major comeback for the fund after being battered during the Covid sell-off. By the end of March, the fund was second from the bottom in the IA Targeted Absolute Return sector having plunged 34.5% in the year-to-date.
On a one-year view the fund is currently up 19.5% against the sector’s gains of 0.2% and over three years has returned 10.7% versus the average peers’ 1.0%.
Lat Am funds dominate biggest laggards in August
While August’s top performers comprised a diverse group of funds, the same cannot be said for August’s worst performers, Yearsley said, seven out of 10 which were Latin America equity funds.
Scottish Widows Latin America was the worst of the lot, down 8.4% in August, followed closely by Liontrust Latin America, a fund it inherited from Neptune, which lost 8.3% and HSBC GIF Brazil Equity, which fell 8.2%.
Yearsley said major Covid outbreaks in countries like Brazil and Mexico had put a damper on Latam markets.
“Add in the reliance on natural resources and commodities and you have a toxic combination,” he said, but added “a weakening dollar could be slightly better news, as it normally is for emerging markets.”
UK govvies see the biggest slump
But collectively UK govvies suffered the biggest slump of any asset class in August with the IA UK Index Linked Gilts and UK Gilts the worst sectors, down 5.4% and 3.8% respectively.
Rounding out the bottom five sectors were Global EM Local Currency Bonds, Global Bonds and Sterling Corporate Bonds, which sank 1.7%, 0.9% and 0.86% respectively.
“August was a poor month for defensive assets as UK government bond yields rebounded having fallen to record low levels on the back of concerns of a US/Chinese trade war, which began to ease,” said Willis Owen head of personal investing Adrian Lowcock.
“This, combined with renewed optimism of a stronger recovery because of better than expected US consumer spending data, as well as higher inflation, led investors to shift away from defensive assets.”
