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Citywire Selection: 3 year review

by Jonathan Miller on Feb 28, 2013 at 12:02

Citywire Selection: 3 year review

As we have now reached the three year anniversary of Citywire Selection we review its performance since launch.

It has been a difficult time for active managers over this time and our analysis shows that just 40% of funds with a three year track record managed to beat their index. This covers the period from 31st December 2009 to 31st December 2012.

Citywire Selection outperforming

Our Citywire Selection picks have fared better. When taking into account all the picks that have featured, 53% have outperformed during the time they have been on the list. We believe our discipline of formally reviewing the consituents twice a year helps us avoid making any knee-jerk reactions and this has contributed to the added value Citywire Selection has brought. It is during these reviews that we make decisions on potential additions and cuts.

Indeed some of the strongest comebacks during 2012 were managers who had been on a difficult run in the preceding couple of years. We highlighted this most notably for Schroder Income Fidelity Special Situations and British Empire Investment Trust. The managers have stuck to their style and process, which is a characteristic we look for and we continue to back this trio for the long term.

Overall, given that we follow individual fund managers, assessing their track records is the key element we consider. In effect this involves evaluating the analysis powering Citywire’s Ratings. And given that these were launched over ten years ago, we have multiple timeframes to refer to.

What now?

Going into the start of 2013 we had 119 picks and this has now been reduced to 118. The closing of Lyxor ETF India (S&P CNX Nifty) meant the passive pick for Indian equities was removed. This leaves the First State Indian Subcontinent fund as our preferred active way to invest in the country.

Clearly no drastic moves have been made and our next formal review takes place when the second half of the year begins.

You can view the whole list which is split into asset classes and general themes, as well as seeing our current view on every pick.

We continually monitor the constituents and keep you informed with fund updates via our weekly email and on the Citywire Selection homepage. There is also an internal watchlist of funds for potential inclusion that forms part of our research. These help us if ever we identify a gap that needs filling or decide to make a straight swap.

2 comments so far. Why not have your say?

Colin Barrett

Feb 28, 2013 at 13:07

so in the last 3 years 60% of actively managed funds have underperformed the equivalent index, and nearly half of your "star picks" have also underperformed.

And this is during a period of extraordinary volatility when according to perceived wisdom stock selectors, tactical asset allocaters, etc, etc are supposed to come into their own and really earn their corn.

Draw your own conclusions....

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Captain Hindsight

Feb 28, 2013 at 13:31

A fund that outperforms its index will in itsefl have contributed to the actual level of the index. Consequently, the mathamatics of averages would predict there will not be any large deviation from the mid point of 50% of funds under and 50% of funds over performing the market.

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