All that glitters
The Schroder Recovery Fund, which has been run by Kevin Murphy and Nick Kirrage for the past decade, illustrates this well. In 2015, the fund made a 12.7% loss and was the worst performer in the sector. In 2016, its 31.1% gain made it the second-strongest fund in the group.
For some funds, 2016 put them among their top-performing peers for the first time in quite a while. Tom Dobell’s £3.4bn M&G Recovery Fund made fourth-quartile returns in 2012, 2013, 2014 and 2015 but was ranked 14th out of 266 funds last year after making 20.7%.
Aberdeen Responsible UK Equity was also bottom quartile in those four years but was the 10th best performer of 2016 with a 22.1% return.
The underperformance of growth stocks does not mean those investing in them had a terrible year, however.
Nick Train’s £3.1bn CF Lindsell Train UK Equity Fund has established a fantastic track record on the back of his highly concentrated portfolio of growth stocks.
The fund lagged behind the FTSE All Share and was not in the sector’s top quartile for a full calendar year for the first time since 2007, although it must be noted that its 11.3% total return was enough to put it in the second quartile in 2016.
In a similar vein, none of the above means value has been the golden ticket and guaranteed outperformance in 2016.
The worst performer in the IA UK All Companies sector last year was Jupiter UK Growth, down 6.4%. The fund targets both growth and recovery stocks but a significant chunk of its portfolio is in value names.
Other value funds finding themselves in the peer group’s bottom quartile included CF Miton UK Value Opportunities and MFM Slater Recovery, which, unlike some other value funds, had spent the previous two years at the top of the sector.
