Eight in ten UK active funds have outperformed since Brexit vote

Funds and Investment Trusts September 25, 2017 by Kyle Caldwell

Active funds that invest in UK shares have proven their worth since last June, new analysis has found.

The vast majority of actively managed UK equity funds have managed to gain an edge over comparable stock market indices since last June’s Brexit vote.

From the end of June 2016 to the end of June 2017 eight out of ten UK equity funds outperformed, according to S&P, which for the past 15 years has produced regular reports comparing the performance of active funds against passive benchmarks.

UK smaller company funds had an even higher score in terms of outperformance, with 94 per cent of funds beating the benchmark, whereas the UK large cap/mid cap equity sector had three in four funds (76 per cent) in the outperforming camp.

According to S&P, over the one-year period analysed, ‘actively managed UK equity fund performance stood out’.

It adds: ‘British pound sterling-denominated active funds investing in UK equity achieved an average asset-weighted return of 24.2 per cent over the one-year period, compared with 17.6 per cent for the S&P UK benchmark index. Only a fifth of these active UK equity funds were beaten by the benchmark in the same period.’

Further, S&P adds, the real star performers in the UK were those active funds investing in small-cap stocks, generating average asset-weighted returns of 38.3 per cent for the year, compared with 22.7 per cent for the S&P UK Small Cap index.

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When looking at UK fund performance among Investment Association (IA) members over a more up-to-date timescale, UK smaller company funds have continued to be the big winners. According to FE Trustnet, the sector average return for the IA UK smaller company sector between June 23 last year and 18 September 2017 stands at 31.4 per cent. This is comfortably ahead of both the IA UK all companies and the IA UK equity income sectors, which have returned 18.5 per cent and 15.1 per cent respectively.

UK small-cap stocks initially suffered a wobble following last June’s Brexit vote, but they have since staged an impressive recovery and raced ahead of their large-cap peers. On the Aim market, for example, two of the best-performing shares since June 23 last year (the day of the Brexit vote) are Boohoo and FeverTree, which have produced total returns of 320 per cent and 220 per cent respectively according to SharePad, a data service for private investors.

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