Fewer than 1% of funds have delivered top quartile returns over each of the past three years
The number of funds achieving top quartile returns over a rolling three-year period has fallen to 0.8 per cent, according to the F&C Multi-Manager Survey.
This ratio is considerably below the historic average of between 2 and 5 per cent. Of the main 12 Investment Association (IA) sectors, only nine out of 1,140 funds achieved top quartile returns over each of the past three years.
Of the four sectors that did have funds achieving top quartile returns, the IA emerging markets sector was the most consistent, with 3.3 per cent of funds achieving this.
This was followed by the IA sterling strategic bond (2.9 per cent), IA sterling corporate bond (2.6 per cent) and IA UK all companies sectors (1.2 per cent).
Kelly Prior, investment manager for F&C Multi-Manager Solutions, says: ‘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.’
The research also looked at the best and worst-performing sectors over the first quarter of 2017. It found that the Asia Pacific ex Japan sector was the best-performing sector, gaining 11.6 per cent, with China & Greater China close behind rising 11.4 per cent.
In the UK, the UK smaller companies sector was the strongest performer with gains of 7.3 per cent, the UK all companies sector was the next best performer gaining 4.5 per cent, and UK equity income rose 4.2 per cent.