The UK election has thrust Harry Nimmo to the top of three-year performance tables across all Investment Association sectors, according to BMO Global Asset Management analysis, which also showed up that US equity managers were the most consistent performers over the period.
The final quarter of 2019 proved positive for most asset classes with 31 out of 37 IA sectors delivering positive returns.
UK equity funds, which had been deeply unloved for most of the year, posted the strongest returns overall.
The IA UK Smaller Companies sector recorded the largest gains, ratcheting up 13.9%, followed by the UK Equity Income sector (7.2%) and the IA UK All Companies sector (7%).
Harry Nimmo fund up more than 20%
The Aberdeen Standard Investments Smaller Companies fund run by Harry Nimmo was the single best performer. The fund delivered 20.29% returns over the quarter; over one year it’s up 33.88%.
Around half of its 50 holdings are in UK mid-cap companies.
“Investors in UK assets enjoyed a positive bounce in the final quarter due to greater clarity on Brexit,” said BMO multi-manager team member Kelly Prior (pictured). That is due to the UK general election delivering Boris Johnson a greater majority to push through the UK’s exit from the European Union in parliament.
“UK equity funds with a strong bias to UK mid-cap and domestic exposures were the major beneficiaries, and this was a driving factor in the ASI (AAM) UK Smaller Companies fund, run by Harry Nimmo, topping the performance tables of the IA universe over a three-year period.”
The fortunes for sterling bond sectors were more mixed. While the IA £ High Yield and £ Strategic sectors posted gains of 2.2% and 0.7%, IA UK Index Linked sector was the biggest laggard, plunging 9.4%, followed by the IA UK Gilt sector which lost 4.5%.
US equity funds deliver most consistent performance
But research from BMO Gam shows only 24 funds out of 1090 across the 12 main sectors of the IA universe managed to deliver consistent top-quartile performance over a rolling three-year period. The figures were calculated to the period ending Q4 2019.
This was an improvement on the previous quarter when only 18 funds or 1.7% of the universe topped the performance charts. Though Prior said the Q4 2019 BMO MM Consistency ratio of 2.2% is “incredibly low” she said it fits within the historic range of 2-4%.
One third of last quarter’s winners came from the IA North America sector, with 9.1% of funds in the sector making the cut, which Prior noted was unusually high.
US equity managers continued to dominate when lowering the hurdle to include above average performers. The IA North America sector accounted for 23.9% of funds out of 139 that were able to deliver above median performance over three consecutive years.
It was followed by IA Europe Ex-UK and IA Japan which had 16% and 14% of funds above target.
Global bond managers were the least consistent performers with only 5.5% of funds besting the median hurdle.
