Role reversal
The impact of the resurgence of value investing is clear when last year’s fund performance tables are examined. Starting with the IA UK All Companies sector – the largest in the Investment Association universe – we can see the best performer of the year has a clear value bias.
As its name suggests, David Cumming’s £42.3m Standard Life Investments UK Equity Recovery Fund concentrates on large- and mid-cap stocks that are unloved by the market but where the manager believes there is a chance of a turnaround in performance. Top holdings include Barclays, Glencore International and Anglo American.
The fund topped the sector in 2016 after making a total return of 51.5% but this comes after two years in the IA UK All Companies peer group’s bottom quartile. It was down 6.6% in 2015, when its average peer made 4.9%, and lost 2.9% in 2016, against a 0.6% rise in the sector.
This trend is not only apparent in the top performer of the sector but among the 15 highest-returning funds of 2016.
While Standard Life Investments UK Equity Recovery made the year’s highest return by a clear margin of more 20 percentage points, each one of the remaining 14 funds on the list has a clear value approach to investing and achieved a return of more than 20%.
What is more, every one of these funds, bar 7IM UK Equity Value, which has too short a track record, was in the IA UK All Companies sector’s bottom quartile during 2015, while more than half were bottom quartile in the previous year as well.
