Number of consistent fund performers falls below 1%
The number of funds achieving top quartile returns over a rolling three year period has fallen to 0.8%, driven by geopolitics impacting market sentiment.
According to the F&C Multi-Manager Survey, of the main 12 IA sectors, only nine out of 1,140 (0.8%) funds achieved top quartile returns over three years. This is considerably below the historic average of between 2% and 5%. Of the 12 sectors, eight sectors failed to record a fund achieving this feat.
Of the four sectors that did have funds achieving top quartile returns, the IA Emerging Markets sector was the most consistent, with 3.3% of funds achieving this. This was followed by the IA £ Strategic (2.9%), IA £ Corporate Bond (2.6%) and IA UK All Companies sectors (1.2%).
Lowering the hurdle, 124 out of 1,138 funds delivered above median returns over three years as at the end of Q1 2017. A quarter of funds in the IA £ Corporate Bond sector recorded this, the highest proportion of the 12 sectors. The IA Global Equity and IA £ Strategic Bond sectors recorded the second and third highest at 18.4% and 15.9% respectively.
Kelly Prior, investment manager for F&C Multi-Manager Solutions, commented: “In the first quarter of 2017, our survey revealed an unusually low number of funds achieving consistent top quartile returns. This is not surprising given how much markets were impacted by geopolitical factors and central banks policies. Politics exerted significant influence on the direction of currencies of the affected economies.”
“Despite the Federal Reserve raising interest rates, the dollar fell back as confidence in the ability of president Trump to push through market friendly policies fell. However, the yen was the beneficiary of this, making solid ground over sterling as a perceived safe haven currency,” Prior added.