Market volatility means very few funds posting consistent top performance says F&C survey

25th July 2013

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Recent market volatility means that funds are proving to be less consistent according to the experienced multi-manager team at F&C investments. Funds achieving top quartile and above median returns over three years fell in the second quarter of 2013 according to the latest FundWatch survey.

According to the F&C Consistency Ratio, a remarkably low 25 of 1221 (2.05%) funds in the 12 main IMA sectors were top quartile in each of the last three 12 month periods as at the end of the second quarter of 2013. This marked a notable decline on the first quarter survey 2013 when 4.56% funds achieved this feat. Of the 12 IMA sectors, four of them recorded no consistent funds and the IMA Global Emerging Markets sector was the most consistent sector, with 9% making the grade. However, this was a decline on Q4 2012 and Q1 2013 when 17% and 11% funds in the sector respectively recorded this.

Lowering the hurdle rate to above median returns in each of the last three 12 month periods saw just 11.79% of funds making the grade. This is compared to 16.52% in Q1 2013.

Rob Burdett, co-head of multi-manager at F&C Investments says: “After a significant jump in top quartile consistency in the first quarter of this year, Q2 2013 saw a lurch back to the bottom end of the historic range of between 2 and 4%. The average overall was bumped up by the small IMA Global Emerging Markets sector, where four of its 46 constituents achieved consistency; however, three of these were First State Emerging mandates and therefore linked. Consistency, it would seem, is as hard as ever to find.”

The survey also found that the second quarter of 2013 brought with it a more mixed picture in terms of sector performance. Despite a sell-off in the final month, the IMA Japan sector was the best performing sector of the quarter following a positive run in the early part of the quarter.

The slowdown in China meant the IMA Global Emerging Markets sector was the worst performer, falling 8.5%. This was closely followed by the IMA Specialist sector, falling 7%, due to its commodity heavy constituents. All bond sectors fell in the quarter, with the IMA Mixed Investment 0-35% Shares sector also suffering due to its likely bond exposure.

F&C says there were 35 new fund launches in Q1 2013, with mixed/multi-assets mandates most prevalent. Of those funds launched, the River & Mercantile World Recovery fund was 1st percentile within the IMA Specialist sector, achieving the highest peer group ranking in Q2 2013.

Following the trend of the previous two quarters, the best performing fund was Japanese. This time it was the CF Ruffer Japanese fund, compounding the strong returns of the market. Finally it say no funds achieved the perfect mix of top of the sector return with bottom of the sector for volatility over three years.

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