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The best and worst UK equity funds in 2011

We reveal which funds investing in the shares of UK companies performed the best and worst for investors last year.

 
The best and worst UK equity funds in 2011

Funds investing in the UK stockmarket had a tough time in 2011, with just one in five beating the FTSE All Share index, according to analysis of data on the Citywire Money website.

Using Citywire data

For this analysis we have looked at the 283 unit trusts (or open-ended investment companies as some of them are called) operating in the UK All Companies sector of the Investment Management Assocation. This excludes investment trusts and exchange traded funds and unit trusts investing in smaller company shares, all of which we will look at seperately.

To do this we have looked at the one- and three-year returns of UK All Companies funds available on our website. This performance data comes from a specialist provider called Lipper, which is part of the Thomson Reuters group, but you can see the figures for yourself by following the links in this article. 

Last year the FTSE All Share fell 3.5% although just 57 funds in the UK All Companies sector beat this return.

However, as this table shows there were some clear winners. Among the top performers are funds that are either recommendations of our Citywire Selection team and / or are run by managers rated by Citywire for good investment performance.

Our exclusive fund manager ratings are based on our analysis of the Lipper fund performance data. You can find out more about how we rate fund managers here.

Top 10 UK All Companies funds in 2011

Ranking Fund name Total returns over 1 year
1 Liontrust Special Situations 7.6%
2 Liontrust UK Growth 5.1%
3 JOHCM UK Opportunities Ret Acc GBP 4.6%
4 Neptune UK Mid Cap A Acc GBP 3.7%
5 IM Matterly Equity Acc 3.4%
6 Jupiter Uk Special Situations 1.6%
7 The Capital Trust 1.6%
8 CF Lindsell Train Uk Equity Acc 1.4%
9 Cazenove UK Opportunities B Acc 1.4%
10 Franklin UK Blue Chip Growth 1.4%

Click on the links in the table to find out more about the funds and their managers.

The top performer of 2011 was the Liontrust Special Situations fund, with total returns of 7.6% closely followed by the Liontrust UK Growth fund in second place, which gave returns of 5.1%.

Both funds are overseen by Citywire A-rated managers Anthony Cross and Julian Fosh, with top holdings in BG Group (BG.L), BP (BP.L) and Unilever (ULVR.L).

This is a comeback for Liontrust, a small independent investment management company, which was hit by the defection of two of its leading fund managers (Jeremy Lang and William Pattisson) three years ago.

In third place is Citywire Selection star pick, JO Hambro Capital Management’s, UK Opportunities fund, with top holdings in GlaxoSmithKline (GSK.L) and Unilever (ULVR.L).

The fund is managed by John Wood, who says he is keeping his sights firmly on equities in blue-chip companies with little or no debt.

In sixth place is Jupiter UK Special Situations , another Citywire Selection pick, managed by Ben Whitmore.

In eighth is the Lindsell Train UK Equity fund, run by veteran manager Nick Train, who gained his first top Citywire AAA rating last month.

Matching his fund's 1.4% return last year are Cazenove UK Opportunities , run by Citywire A-rated Julie Dean, and the Franklin UK Blue Chip Growth fund, managed by Colin Morton. Our factsheet still carries the old name of Rensburg, an investment company recently acquired by Franklin Templeton. 

Taking a three-year view

A year is too short a time to judge a fund or manager's performance. Looking at the three-year figures gives a better idea of what is going on.

In the three years to the end of 2011 the FTSE All Share rallied 43.85% as the stock market bounced back from the 2008 financial crisis.

With this fair wind in their sails, a total of 100, or 37%, of the 269 UK All Companies funds beat the All Share return.

Top UK All Companies funds 2009-2011

Ranking Fund name Total returns over 3 years
1 MFM Slater Growth 150.6%
2 Cavendish Opportunities Retail 136.4%
3 Legal & General UK Alpha Trust R Acc 120.4%
4 SVM UK Opportunities 120.3%
5 Standard Life Inv UK Equity Unconstrained Ret 119.74%
6 Liontrust Special Situations 107.3%
7 Standard Life Inv UK Equity High Alpha Ret Inc 88.94%
8 F & C UK Mid Cap 1 Acc 88.03%
9 Majedie Asset UK Opportunities A Inc 83.51%
10 MFM Slater Recovery Acc 82.51%

Click on the links in the table to find out more about the funds and their managers.

In that time the MFM Slater Growth fund, run by Citywire AAA rated manager Mark Slater, beat all other funds and more than tripled the benchmark’s returns, to give 150.6%.

Slater, whose father Jim is a legendary stock market investor and author of The Zulu Principle, began his running his first portfolio as a teenager and founded Slater Investments in 1994. The fund's top holdings include film distribution group Entertainment One (ETO.L) and manufacturer Oxford Instruments (OXIG.L).

Other top performers include Cavendish Opportunities Retail fund and Citywire Selection star pick Standard Life UK Equity Unconstrained fund. The latter is managed by Citywire Top Stocks manager Edward Legget. Its high ranking masks a volatile performance from this punchy fund, which lost 20% last year and ranks near the bottom of the one-year league table.

Once again, the Liontrust Special Situations fund makes an appearance at sixth place in top performing funds in the past three years.

Struggling at the bottom…

A look at the worst performing funds shows the Manek Growth fund came in last with paltry returns of just 2.4%.

The fund is managed by Jayesh Manek, who launched his own fund management business in 1997 after winning the Sunday Times Fantasy Fund Manager competition two years in a row.

Worst performers of 2009-2011

Ranking Fund Name Total Returns over 3 years
1 Manek Growth 2.4%
2 Legal & General UK Special Situations R Acc 10.7%
3 Marlborough UK Large Cap Growth A 13.4%
4 Newton Income GBP Inc 13.5%
5 Legal & General Equity Trust R Inc 19.1%
6 Jupiter Undervalued Assets Acc 20.2%
7 Ignis Cartesian UK Opportunities A 20.7%
8 Pru Ethical Trust 22.4%
9 CF Taylor Young Opportunistic A Acc 22.9%
10 EFA OPM UK Equity A Inc 23.7%

Click on the links in the table to find out more about the funds and their managers.

Manek Growth had a rocky ride in 200-2003 but bounced back in 2007 to beat its rivals with returns of 12.1%. Manek himself was a Citywire rated fund manager in 2008 and 2009 but has since dropped out of the ratings.

The fund’s biggest holdings are in video search engine Blinkx (BLNX.L), Heritage Oil (HOIL.L) and Wolfson Microelectronics (WLF.L).

18 comments so far. Why not have your say?

sgjhaghsdg

Jan 23, 2012 at 12:38

I tend to avoid actively managed funds due to the high fees and lack-lustre average performance, and am generally dismissive of those who say this doesn't matter as all you have to do is always back the winning horse and ignore those who are going to lose.

Then I bought some Liontrust Special Situations at the start of 2011 as I liked what they said about their investment strategy. Hoist by my own petard!

(Of course, the very strategy that drew me, of buying into smaller companies with wide moats and a good growth story, was almost immediately ditched in favour of buying those same blue-chip defensives that I hold in my own share portfolio!)

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Dreckly

Jan 23, 2012 at 14:26

So, despite a few outstanding performances over the last 3 years, of the 283 funds analysed, 183 didn't beat the FTSA All Share index.

I'd be interested to know how many would have under-performed the typical FTAS tracker fund or non-synthetic ETF tracker - when the total management costs are included in the equation...

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Henry Davie

Jan 23, 2012 at 15:48

Take a look at a top and bottom performer over a 5 year timescale - and you may change your mind as to the advisability of jumping on a bandwagon based on recent performance (even on a 3 year timescale).

On looking at a 5-year Graph of Newton Income vs Liontrust Special Situations, it appears that over the first 3 years, the Newton fund gave a better return. But yes - over the past two years the Liontrust fund has triumphed. But the question is - which fund has the best strategy for the conditions that may exist over the next three years?

Past Performance is no Guide to Future Performance!

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sgjhaghsdg

Jan 23, 2012 at 15:55

@ Henry Davie - yup, spot on, and that's why fund managers are going to have to buy their yachts without contributions from me in the future. I'm slowly selling down all my OEICs and UTs and moving into Vanguard trackers, a few ETFs and some conviction ITs.

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Nodrog

Jan 23, 2012 at 15:55

Aye, Dreckly hit the nail on the head!

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Mystery X

Jan 23, 2012 at 18:28

sgjhaghsdgs - Which broker are you using for the Vanguard trackers. My broker HL is now charging £2 per month for each tracker. I also have an account with Alliance Trust that I have not activated and need to check their charges, Thinking of putiing whole year's ISA allowance into Vanguard trackers. Which ones have you selected.

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sgjhaghsdg

Jan 23, 2012 at 19:14

@mystery x - I had all the forms filled out to start a HL SIPP before they wrote their "suicide note" regards tracker charges. I then chose BestInvest, who have a platform charge of £60pa for an ISA or £120pa for a SIPP if you hold any "verboten" trackers. I'm not sure if they charge this if you just go for equities and ETFs, but I hold these alongside Vanguard trackers and it's all within the £120pa SIPP charge.

Monevator has a good article on "drip feeding into Vanguard trackers" and also on the Vanguard LifeStrategy trackers, which are a balanced portfolio in a single tracker.

My only issues with BestInvest are that they don't let you hold individual gilts and bonds, and their limit orders are currently seriously broken.

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abbass hassan

Jan 23, 2012 at 19:50

Any advise please on the 10 year sterling bond .many thanks

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Phil_G

Jan 25, 2012 at 12:10

As already stated, trackers are the sensible option. Why pay a fund manager to throw darts at a board?

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Jeremy

Jan 29, 2012 at 12:12

Investment Trusts ? What about a best and worst list..

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Franco

Jan 29, 2012 at 13:02

Congratulation Manek Growth, head of the bottom league again, inspite of your huge charges. Why not? It is rip off Britain, is it not?.

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Hilary hames

Jan 29, 2012 at 17:35

sgjhaghsdgs - I noted on another thread that you hold a couple of etfs for bonds but that you think active is better for bonds, you mentioned Old Mutual I think as one you like. So are you keeping that? I havent a bond fund at the moment and all the commentators talk about preferring income producing equities but I wonder if a bond fund is still a good bet.

You mention about the links for limit orders on BestInvest being poor - that is only relevant if you are buying shares or ETFs isnt it? Why not buy the ETFs somewhere else if a problem on Best Invest eg iii aregood as dividend re-invvestment so cheap. (Am talking outside of an ISA as no experience of those)

With BestInvest can you sell and buy funds and trackers in one 24 hour transaction? Havent changed from HL yet but must. Someone on MSE has said that Fidelity does not allow it, your cash goes into a cashpark and then the new fund is bought the next day. Maybe this is normal , I dont actually know what happens with HL but with Co-Funds there is the delay. An article in this weeks Sunday Times likes Alliance Trust as a broker.

I suppose all the online brokers will start charging like HL for trackers and from 2013 if only it could be a percentage rather than a fixed charge it would be fairer.

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sgjhaghsdg

Jan 29, 2012 at 17:59

@Hilary -

> I noted on another thread that you hold a couple of etfs for bonds but that you think active is better for bonds

I used to think that Fixed Interest was boring, but it's become quite lively over recent years as attitudes to risk have changed. Companies issue huge numbers of different bonds and bond-like-things, and each comes with a huge prospectus, packed with complex clauses and terms. Calls, conversion, seniority, and much more have to be taken into account, as do (dodgy!) ratings. It gets even worse when push comes to shove and they start changing the terms, suspending coupons, and defaulting ...

> you mentioned Old Mutual I think as one you like. So are you keeping that? I havent a bond fund at the moment and all the commentators talk about preferring income producing equities but I wonder if a bond fund is still a good bet.

What I want from a bond fund is complete and utter boredom. I don't want them to take silly risks, don't want them to grab high-risk/high-yield bonds to try and out-perform their peers, and am happy to take a long term view. Old Mutual seems to supply that.

Income producing equities are great, but you need bonds/gilts to reduce volatility, and if they are uncorrelated and you rebalance, they can increase return.

Note that I'm being very naughty and that other than the Old Mutual fund I don't currently hold any gilts. Corporate bonds correlate with equities far more than gilts do, so I'm getting one bonus but not the other. I will address this when gilt yields rise but not before.

> You mention about the links for limit orders on BestInvest being poor - that is only relevant if you are buying shares or ETFs isnt it? Why not buy the ETFs somewhere else if a problem on Best Invest eg iii aregood as dividend re-invvestment so cheap. (Am talking outside of an ISA as no experience of those)

Yes, limits orders don't apply to funds. The reason why I need the bonds and property in the same pot is that you can't move funds in and out of SIPPs (or into ISAs) willy-nilly so you need to hold a mixture of assets in each separate pot if you intend to rebalance.

> With BestInvest can you sell and buy funds and trackers in one 24 hour transaction?

No, there are deadlines for placing deals, and it then happens at the next valuation point. However, you don't get notice of price etc. for another couple of days. Valuation points vary from fund to fund, and even between the various Vanguard trackers. This certainly isn't for market timers, but surely that doesn't describe us? :-)

I'd prefer that it was faster, but it's fine for annual tweaks.

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David V Henderson

Jan 31, 2012 at 12:16

@MysteryX. I have read several articles re investing in the Vanguard Life Strategy funds via HL. After doing the sums and looking at other similar tracker funds available through HL (there aren't really any that give you a lifestyle range option), it actually works out that the Vanguard funds are still highly competitive (platform charge included) if you are investing at least £5k, as I have done.

I looked at the other tracker funds with no platform charge and they didn't have the mix of equity and FI that i was looking for. If you are looking for straight forward UK or European equity trackers I think you will have more of a choice.

Hope this helps.

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Mystery X

Jan 31, 2012 at 13:16

Many thanks David. Am I to assume that you have put in £5K into a Vanguard Fund with HL and agreed to pay £2 a month. If so what is the name of the Fund so I can study. In fact I am also contemplating putting in £5K in a max of one to 2 funds to keep the costs low. Many thanks again David. Much appreciate your help.

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David V Henderson

Jan 31, 2012 at 16:03

Myestery,

The Vanguard Life Strategy funds allow you to change from 20% equity up to 40%, 60%, 80% or 100% equity with the balace in FI. You can therefore move up and down as you think the maket will move or as your appetite for risk and volatility change. Obviously you should invetigate for yourself just to be sure you know exactly what you are investing in.

Glad to be of assistance

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Hilary hames

Feb 01, 2012 at 00:07

@ sgjhaghsdg

Now, where did you get that name from? I have to copy and paste it.

Thank you for all the info about, very interesting. Re Old Mutual I shall investigate further, I do need a bond fund.

Re Best Invest, no its not so much timing the market except that at the moment the market does seem to need some timing. I really am trying to find out which broker to go with as I made a mistake when i bought several lots of shares thru x-o becuase re-investing divis with them is expensive, fine though if you just are just in a share for short term. So, just to be clear, if I had a bog standard tracker say, eg HSBC ftse all share and I wanted to move to say, Ftse 100 would that complete in one day or would the money move into my account one day after the valuation point and then out again the next ie always take a minimum of two days.?

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sgjhaghsdg

Feb 01, 2012 at 08:41

> Now, where did you get that name from? I have to copy and paste it.

I lost the password for my main account and created a new one by hitting a few keys at random. I'm not sure how I managed to miss 'f'.

> i bought several lots of shares thru x-o becuase re-investing divis with them is expensive

I wait until divis have added up to maybe £2k and then make a top-up or buy a new holding. Alternatively, keep lobbing it into a (say) bond fund in £100-£200 chunks and then take care of it when you rebalance.

> if I had a bog standard tracker say, eg HSBC ftse all share and I wanted to move to say, Ftse 100 would that complete in one day or would the money move into my account one day after the valuation point and then out again the next ie always take a minimum of two days.?

Normally two days, but it depends on whether the broker is funding or non-funding (or part funding!) - you can tell this by how long it takes for the tax relief to hit a SIPP or just ask them. I tend to hold enough cash to allow for minor rebalancing, or I sell some bonds in advance and then take care of the equitiy buys and sells before rebuying bonds.

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