CT Fund Watch: IA Japan houses the most consistently performing funds in first quarter

Overall number of funds with top-quartile returns over three consecutive 12-month periods falls marginally in Q1

Two racing drivers celebrate a win


The number of funds delivering consistent top-quartile returns fell to 38, or 2.7%, in Q1 2024, according to the latest Columbia Threadneedle’s Multi-Manager Fund Watch survey.

Though it marks a marginal fall from the 39 consistent performers in Q4 2023, it is an improvement on Q1 last year when only 23 funds recorded consistent top-quartile returns.

The Fund Watch survey highlights funds that have achieved top quartile returns over three consecutive one-year periods.

A further 258 funds delivered above-median returns consistently in the quarter, almost double the 136 recorded in Q1 2023.

See also: AJ Bell: Six companies that could IPO in London this year

The IA Japan sector housed the most consistently performing funds with eight of the 68 strategies in the quarter delivering a top quartile return overall.

The next best sector was the IA Global Mixed Bond sector, with six of 71 funds achieving this target.

Meanwhile, the IA Sterling Corporate Bond and the IA Sterling Strategic Bond sectors both had a single fund deliver top-quartile returns consistently, with  no IA UK Equity Income funds meeting this hurdle.

Adam Norris, investment manager in the multi-manager team at Columbia Threadneedle Investments, said: “Consistency was remarkably, well…. consistent between quarters, despite the large rally in equity markets.

“Once again, Japan was a rich hunting ground for solid fund performance mainly driven by corporate reforms continuing to unlock shareholder value within Japanese equities. Interestingly, with US equities comprising ever larger parts of global portfolios, it is disappointing to see a lack of consistent US equity funds.”

In terms of investment performance, the IA Technology and Telecoms sector delivered the best returns in Q1, followed by the IA North America sector.

Norris added: “Looking forward, we see continued support for equity markets with company earnings remaining relatively resolute. It is worth remembering that optically expensive markets can remain so for some time.

“Alternative assets are currently presenting some tremendous value, such as investment trusts with high dividend yields supported by strong cash generation, therefore, investors are being paid to be patient for a re-rating. Unfortunately, corporate bond spreads are once again reaching multi-year lows, limiting future excess returns.

“All eyes remain focused on central banks and their assessment as to whether we are at acceptable levels of inflation once again, or whether it is too soon to cut interest rates when the underlying strength of the economy remains robust.”