As you may have already read, 26% of 100 IFAs surveyed by Rostrum Research picked out Invesco Perpetual (£47bn retail assets according to the IMA) to be the fund brand that has gained most in the past five years post the collapse of Lehman Brothers.
Neil Woodford’s £14bn High Income Fund was also both the most popular fund recommended in 2008, and still is today despite the considerable changes to economic and market conditions. It’s fair to say he still has that X Factor, despite the size of his funds.
They could do a lot worse of course, with Mr Woodford’s long-term track record the envy of many of his peers, and the popular income element of his strategy should also not be understated. Still, a huge swathe of those questioned see overcrowding in the financial services market as the biggest challenge going forward – should this not include multi billion pound funds?
Size matters
A list at the top-20 post-Lehman performers from FE Analytics includes no Invesco Perpetual funds. In fact, what stands out is the variety of brands in the rankings – 17 different names – and the size of many of these vehicles
These include £54m MFM Slater Growth Fund, £29m MFM Techinvest Technology Fund and £84m Cavendish Opportunities among them. The best performing fund, Fidelity UK Smaller Companies (up 242%), was actually soft closed before it reached its £280m target.
Still, at least the IFAs got the asset class right with the majority of the best performers being UK equity funds, though most focus on small and medium-sized companies.
“Looking at all the funds that were in existence five years ago, and which are still around today, just 20 out of 1434 (1%) are still in negative territory and only 7% have not beaten cash over that time period,” says Darius McDermott, managing director at Chelsea Financial Services.
UK OK
“Interestingly, while we have heard nothing but doom and gloom in the UK for the last five years – with unemployment rising, the economy flat-lining and the high street losing some very big names – of the top 20 performing funds over the period, no fewer than 15 are UK equity funds.”
Going by contrarian logic, If UK funds have been the best performers over the past five years, chances are they will not in the next five years.
The truth is nobody knows which funds or sectors will deliver, which is probably why long-term champions such as Woodford will continue to get the IFA vote over their smaller competitors (though, of course, there’s no reason why you can’t hold both).
