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How fund fortunes changed as markets partied in January

We look at the best and worst performing funds in Global Emerging Markets, UK All Companies, UK Smaller Companies and UK Gilts.

 
How fund fortunes changed as markets partied in January

The latest fund performance figures for January confirm the startling turnround in the fortunes of many of last year's losers.

Markets rallied during the month on the back of good news from the US economy, where manufacturing orders rose and unemployment fell. The belated realisation that the European Central Bank's offer of cheap three-year loans was a bit of a masterstroke by its new president, Mario Draghi, also boosted investor confidence.

The result was a dramatic return to 'risk on' after the 'risk off' mood in the second half of last year. In January the MSCI AC World total return index gained 5.6%, its strongest January since 1997. Emerging markets stormed back with an 11.4% advance, while the US and Europe equity markets both returned 4.7%.

The revival in shares did not harm corporate bond markets either. Higher risk and higher yielding 'junk' bonds rose 2.9% in the US and by 6.6% in Europe, according to  Merrill Lynch Wealth Management.

A look at the latest fund performance data on Citywire Money shows the dramatic turnround.

Global Emerging Markets

Ranking Fund name Total returns over one month
1 HSBC GIF Global Emerging Markets Equity 16.9%
2 IM HEXAM Global Emerging Markets 15.2%
3 BNY Mellon Global Emerging Markets Eq Val 12.5%
4 Templeton Global Emerging Markets 12.4%
5 Lazard Developing Markets Retail 12.3%
Worst performers
59 Somerset Emerging Markets Small Cap -1.5%
58 Neptune Emerging Markets 2.1%
57 St James's Place Global Emerging Markets 2.6%
56 Somerset Emerging Markets Dividend Growth 2.8%
55 First State Global Emerging Markets Leaders 3.1%

As a result several emerging markets funds managed to recoup most of their losses from the second half of last year.

There was a similar picture in funds investing in UK smaller companies. Although over three years this is by far the strongest fund sector, last year the sector's funds lost around 5% on average. Again, the sector's top five funds more than made up for this. 

UK Smaller Companies

Ranking Fund name Total returns over one month
1 FF & P Small Cap UK Equity 13.9%
2 Aberforth UK Small Companies 9.9%
3 M&G Smaller Companies 9.1%
4 Fidelity UK Smaller Companies 8.9%
5 Henderson UK Smaller Companies 8.8%
Worst performers
59 Discretionary Unit 0.7%
58 Close Beacon Investment 2.4%
57 PFS Downing Active Management 2.5%
56 Liontrust UK Smaller Companies 3.0%
55 CF Octopus UK Micro Cap Growth 3.9%

The UK All Companies sector provides a striking example of the January party atmosphere. Standard Life Investment Management had a torrid time last year. In particular, its UK Equity Unconstrained fund, run by Edward Legget, a Citywire Selection favourite and a membrer of our Top Stocks panel, lost more than 20%. It clawed back nearly 10% in January.

UK All Companies

Ranking Fund name Total returns over one month
1 Standard Life Inv UK Equity Recovery 13.9%
2 Standard Life Inv UK Equity Unconstrained 9.9%
3 River and Mercantile UK Eq Long Term Recovery 9.1%
4 Melchior UK Opportunities GBP 8.9%
5 Schroder Recovery 8.8%
Worst performers
286 Manek Growth 0.7%
285 St James's Place UK & General Progressive 2.4%
284 JOHCM UK Opportunities 2.5%
283 Scottish Widows UK Select Growth 3.0%
282 Marks & Spencer UK Selection Portfolio 3.9%

While corporate bonds also rallied, the same was not true of funds investing in UK government gilts. The sector is the best performing over the past 12 months, with the average fund gaining an astonishing 18.1%. This flight clearly stalled in January, with no fund in the sector making signficant gains.

UK Gilt

Ranking Fund name Total returns over one month
1 Vanguard U.K. Long Duration Gilt Index GBP 0.7%
2 Threadneedle Investment Fund III UKFxdInter 0.1%
3 Skandia Gilt 0.0%
4 Threadneedle Investment Fund III Shrt Dtd GltInstGrInc 0.0%
5 City Financial Strategic Gilt -0.1%
Worst performers
29 Baring BAM UK Long Dated Gilt -0.5%
28 Henderson Long Dated Gilt Inc -0.5%
27 Allianz PIMCO Gilt Yield -0.5%
26 M&G Gilt & Fixed Interest Income -0.4%
25 AXA Sterling Long Gilt H -0.4%

7 comments so far. Why not have your say?

Mike

Feb 21, 2012 at 14:02

It would have useful to place these figures in the context of longer term perfomance. A rebound often follows dreadful earlier performance.

report this

george_the_third

Feb 21, 2012 at 19:50

Is it really a useful exercise to compare fund performance over a period as short as one month?

I don't think so.

Mike's suggestion that short-term performance be compared with longer periods would help. But I still wonder if it was worth doing at all.

report this

Ray Wolfe

Feb 21, 2012 at 21:34

"Is it really a useful exercise to compare fund performance over a period as short as one month?"

Of course it is ... provided they tell us about it at the beginning of the month instead of the end!

report this

Jimlad

Feb 22, 2012 at 10:29

I really enjoyed the comment by Ray Wolfe!

report this

Ladysaver

Feb 22, 2012 at 13:35

I have no interest at all in what any fund does over the gnat's-breath space of a month. Rather silly article!

report this

Dreckly

Feb 22, 2012 at 15:05

I'm with you Ladysaver, Mike, Ray Wolfe et al

My bottom lip wibbled when I saw First State Global Emerging doing "so badly" compared with Templeton's equivalent as I have a reasonable wedge in that fund.

But I checked, and over a slightly more meaningful 12 months, they were about +16% better than Templeton. Three and Five year comparisons also better than Templeton.

So, on this one day performance (21 Feb) I'd rate Gavin Rumsden down at least 50%.

report this

clarkkent

Feb 26, 2012 at 19:45

Quite a few years ago I changed my Virgin tracker ISA to a Manek "growth" ISA.

What a humungus mistake that was! Within a month it had lost 60% of its value and never recovered. I see that things haven't changed much. Nowadays I could easily beat Manek's miserable performance myself.

report this

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Look up the funds

  • HSBC GIF Global Emerging Markets Equity AD USD
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  • IM HEXAM Global Emerging Markets A Acc
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  • BNY Mellon Glbl Em Mkts Eq Val A USD
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  • Templeton Global Emerging Markets A Acc
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  • Lazard Developing Markets Retail Acc
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  • Somerset Emerging Markets Small Cap LLC
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  • Neptune Emerging Markets A Acc GBP
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  • St James's Place Global Emerging Markets Acc
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  • Somerset Emerging Markets Dividend Growth A Acc
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  • First State Global Emerging Markets Leaders A GBP
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  • FF & P Small Cap UK Equity
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  • Aberforth UK Small Companies
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  • M&G Smaller Companies A Inc
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  • Fidelity UK Smaller Companies A Acc
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  • Henderson UK Smaller Companies I Acc
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  • Discretionary Unit
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  • Close Beacon Investment
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  • PFS Downing Active Management A Acc
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  • Liontrust UK Smaller Companies
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  • CF Octopus UK Micro Cap Growth A Acc
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  • Standard Life Inv UK Equity Recovery Ret Acc
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  • Standard Life Inv UK Equity Unconstrained Ret
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  • River and Mercantile UK Eq Long Term Recovery A
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  • Melchior UK Opportunities GBP A Acc
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  • Schroder Recovery A Inc
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  • Manek Growth
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  • St James's Place UK & General Progressive Acc
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  • JOHCM UK Opportunities Ret Acc GBP
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  • Scottish Widows UK Select Growth A Acc
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  • Marks & Spencer UK Selection Portfolio Acc
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  • Vanguard U.K. Long Duration Gilt Index GBP A CAP
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  • Threadneedle Investment Fund III UKFxdInter RetAcc
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  • Skandia Gilt
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  • Threadneedle Investment Fund III ShrtCorpbdInstInc
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  • City Financial Strategic Gilt A Acc
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  • Baring BAM UK Long Dated Gilt
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  • Henderson Long Dated Gilt A Net Inc
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  • Allianz PIMCO Gilt Yield A Inc
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  • M&G Gilt & Fixed Interest Income A Inc
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  • AXA Sterling Long Gilt H Acc Gross
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Look up the fund managers

  • Edward Legget
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