Some of the worst-performing funds of 2018 have shone since the start of the year, new research has found.
In theory, investors are often on the lookout for assets that are out of favour. Negative sentiment towards a certain share or fund often means that it is going for a cheaper price than warranted and, therefore, will bounce back – assuming the company or fund isn’t completely done for.
At least that’s the theory. In practice, investors find it hard buying into out of form shares or funds.
Numerous investment strategies, such as Dogs of the Footsie, have been invented to try and help investors put this theory into practice. Money Observer’s Dogs strategy has been a success over the long run, beating the FTSE 100 index benchmark in 13 of the past 18 years.
Investors who took such an approach for UK funds would also be patting themselves on the back.
Figures from Willis Owen, the online broker, show that anyone who invested in seven of the 10 worst-performing funds in the Investment Association’s UK sectors in 2018, at the start if 2019, would have experienced a gains ranging from 12% to 19%.
The biggest gainer was Allianz UK Mid Cap. The fund was the third worst-performing fund in 2018, losing investors 23%. It has returned 19% since the start of 2019 (to 31 May). In second place was Threadneedle UK Smaller Companies, followed by Merian UK Dynamic Equity in third place, boasting returns of 17% and 16% respectively in 2019. Over the course of 2018 they both lost -21% and -19%, respectively.
Of the 10 worst performing funds of 2018, only one continued to lose money when measured from the start of 2019: L&G UK Alpha Trust.
Adrian Lowcock, head of personal investing at Willis Owen notes about the fund: “This was a well-managed fund under Richard Penny, but since his departure the fund was under a caretaker manager before Rod Oscroft took the reins at the start of 2018. He has struggled in the volatile markets – capturing much of the downside but not benefitting when markets have rebounded.”
|Fund||2018 performance (%)||2019 performance (%)|
|Allianz UK Mid Cap||-22.62||19.3|
|Threadneedle UK Smaller Companies||-20.67||17.13|
|Merian UK Dynamic Equity||-19.40||16|
|Quilter Investors Equity||-23.70||15.68|
|Merian UK Mid Cap||-21.54||14.57|
|Rathbone UK Opportunities||-19.43||13.4|
|Artemis UK Select||-19.70||12.03|
|Standard Life Investments UK Equity||6.30|
|LF Woodford Income Focus||-20.25||0.32|
|L&G UK Alpha Trust||-25.05||-2.8|