Of the 1,153 funds spread across the Investment Association’s 12 major market segments, just four have delivered a top quartile performance over a rolling three years to the end of June – equating to just 0.35%.
Columbia Threadneedle’s Q2 FundWatch survey found its multi-manager consistency ratio for top quartile returns over the time frame “remains in stunningly low territory”.
The first quarter of 2022 set a new low bar when it came to the number of funds achieving a top quartile performance over three years, with just 0.45% making the grade. The more dismal Q2 figure sets a fresh record low.
“It is staggering to see Q1’s exceptionally low numbers superseded, and a new all-time low established so quickly,” the report stated. “Very few funds have proven capable of navigating these choppy market waters. That said, it is a testament, perhaps, to managers that they are holding their nerve and not trying to chase these very unusual markets.”
The four funds that managed to deliver were located in different IA sectors, making it challenging to distinguish any emerging trends.
| Fund | Size | IA Sector |
| Matthews Asia Small Companies | $80.34m (£65.9m) | Asia |
| Luxembourg Selection Active Solar | $284m (£233m) | Global Equity |
| Fidelity Japan | £184.4m | Japan |
| Quilter Investors Sterling Diversified Bond | £303.9m | £ Strategic Bond |
Source: The Multi-Manager People Fund Watch Q2 2022 from Columbia Threadneedle
The challenging macro-economic backdrop is evident even when the hurdle is lowered to measure the number of funds delivering above median returns in each of the last three 12-month periods.
Of the 1,153 funds, just 58 delivered as of the end of Q2, down from 68 at the end of Q1.
The IA UK Smaller Companies sector recorded the highest proportion of funds delivering above median returns (10.4%), followed by IA Asia Pacific ex-Japan (8.8%), while the IA UK All Companies sector recorded the smallest proportion of funds (2.3%).
Kelly Prior, investment manager in the multi-manager people team at Columbia Threadneedle Investments, said: “The funds world is experiencing a challenging period, with macro factors and geopolitics creating an interesting environment for investment right now.
“We launched the FundWatch survey in 2008 and since then we have analysed fund performance during some of the most significant and challenging market events for investors, including Covid, the global financial crisis and the emerging market debt crises.
“However, this quarter’s findings are unprecedented, demonstrating the extreme rotations that markets have been through in the last couple of years and how different flavours of investment have led markets at different times.”
She continued: “While the data points make for hard reading, we believe the data does indicate that fund managers are holding their nerve and not trying to chase these very unusual markets. The only hiding place this year has been cash – and that is far from the natural hiding place of most active managers who will be excited by the opportunity that this current turmoil can offer for the long-term investor.
“As we look ahead, it is interesting to see that there is no dominance of any one style or flavour of mandate in the consistency filter. The next big trend is up for grabs, but for now we may have to wear some volatility before the next pattern emerges.”
