Rated Funds performance review, second quarter 2018

Rated Funds performance review, second quarter 2018.

July 26, 2018

For the latest update on Rated Funds, please click here

Asian Equities

Overview: the region bounced back from a poor performance in the first quarter. The FTSE Developed Asia Pacific ex Japan index returned 4.4 per cent in sterling terms; the wider MSCI AC Asia Pacific index returned 2.43 per cent. The Indian market performed particularly well, up 5.6 per cent in sterling terms.

Notable fund performance: Veritas Asian continues its strong run and was the top performing Rated Fund, returning 6.1 per cent. New India Investment Trust returned 5.9 per cent. Scottish Oriental Smaller Companies also bounced back with a 4.4 per cent return (see outcome of Under Review status below).

SPDR S&P Pan Asia Dividend Aristocrats, an exchange traded fund, returned 5.1 per cent. However, Schroder Oriental Income, the actively managed income trust, lost 2.9 per cent and was the worst performer over the quarter. Over three years the ETF's performance (48.7 per cent) is beating the trust (40.4 per cent) and the open-ended Guinness Asian Equity Income fund (44.7 per cent).

Under review : Jupiter India:

In the first quarter review we voiced concern over the underperformance of Jupiter India fund. In this quarter it has continued to underperform – down 1.6 per cent compared with the benchmark gain of 5.6 per cent. Over the year it has underperformed the benchmark index by 16.9 per cent and its three-year outperformance has evaporated. Therefore we are placing the fund under review.

Outcome of review : Scottish Oriental Smaller Companies Investment Trust

Background: The management team has seen some changes in recent years, but the trust continues to be run in line with First State's proven approach. Since Vinay Agarwal became lead manager in July 2016, the portfolio has become more concentrated and growth-orientated. The trust's focus on quality growth stocks and reducing downside risk has not been in favour as Asia and emerging markets have rallied over the last few years. The trust was fourth-quartile relative to its peers, and behind the benchmark over one and three years.

Outcome: Retained as Rated Fund. Asian market performance over the past few years has been driven by a strong rally in large-company and technology stocks and this has been unfavourable for the trust. The trust should continue to benefit from the tried and tested approach of First State and a highly experienced fund manager supported by a well-resourced team.

European Equities BACK TO TOP

Overview: Political and growth concerns hampered European stock markets in the second quarter, although the benchmark MSCI Europe ex UK index returned 3.2 per cent in sterling terms and the MSCI Europe ex UK Small Cap index returned 4.1 per cent. With one notable exception, investor demand for European investment trusts was very weak, leaving four of the five Rated Funds trading on much wider discounts to net asset value.

Notable fund performance: Jupiter European Opportunities rocketed to the top of the leaderboard with a gain of 11.1 per cent. The investment trust's long-term performance numbers are very strong but returns have been erratic in each of the past three years.

Man GLG Continental European Growth continued its strong run of form from the first quarter, returning 6.9 per cent in the second. Two income-oriented Rated Funds also returned 6.9 per cent: Montanaro European Income and the exchange traded fund SPDR S&P Euro Dividend Aristocrats. The two income-minded investment trusts fared less well, however. European Assets lost 0.9 per cent as its discount to net asset value widened by more than 3 per cent to stand at 5 per cent. A similar fate befell the income shares of JP Morgan European, with the discount widening to 11 per cent. Prospective yields on these two trusts now stand at 6.6 per cent and 4.1 per cent respectively.

Two trusts managed by Janus Henderson also suffered from widening discounts. The small company growth-focused TR European Growth and the more value-minded Henderson European Focus fell into the bottom 10 among all Rated Funds in this quarter. In the latter case the rating has collapsed by 10 per cent, leaving the shares showing a 6 per cent loss over the quarter and trading at an 11 per cent discount. It means manager John Bennett had steered the trust to a reasonable gain at the net asset level over the quarter, which is also true of TR European Growth. However, a further 4.4 per cent fall in its discount to NAV (which is now 10.1 per cent) pushed the share price total return into negative territory at -2.9 per cent.

Emerging Markets BACK TO TOP

Overview: Emerging Markets-focused trusts dominate the list of bottom performers across all Rated Funds in the second quarter. The asset class is caught between the pincers of struggling local currencies, a rising US dollar, trade war threats and concerns about faltering global growth.

In most cases emerging markets Rated Funds have been falling along with the representative indices. The MSCI Emerging Markets index fell 3.5 per cent over the quarter (-2.2 per cent in sterling terms), although smaller developing countries fared worse, with the MSCI Frontier Markets down 9.9 per cent in sterling terms. However Latin American countries fared worse, with the representative MSCI Emerging Markets Latin America index down a meaty 12.6 per cent, led by a plummeting Argentinian peso and important stock markets such as Brazil falling by 15 per cent-plus.

Notable fund performance: Sentiment towards Latin America explains the poor performance of Aberdeen Latin American Equity, down 13.4 per cent, as well as Utilico Emerging Markets. This investment trust has 40 per cent of its assets invested in infrastructure and utilities across the region, which contributed to a 6.8 per cent decline over the quarter.

However, three of the 'lower risk' Rated Funds produced positive returns: L&G Emerging Markets Government Bond Index, an index tracking fund, returned 2.8 per cent, and the actively managed M&G Emerging Markets Bond fund was up 1.2 per cent. The lower-risk index-tracking ETF, iShares Edge MSCI Emerging Markets Minimum Volatility, just made it into positive territory (up 0.8 per cent).

The highly rated BlackRock Frontiers trust, lead managed by Sam Vecht, dropped in line with the MSCI Frontier Markets index, making it the second-worst performer among all Rated Funds. Buts its 9.7 per cent fall was exacerbated by a 2.8 decline in its premium to net asset value. Despite the fall in value the shares continue to command a 1 per cent premium.

Under review: BlackRock Emerging Europe Trust. Fans of Vecht have become a victim of his success with another Rated Fund he manages, BlackRock Emerging Europe. The investment trust's policy to formally offer a tender of up to 100 per cent of its issued share capital has backfired. In May, investors representing around 60 per cent of shares tendered their shares for redemption, which led the board to decide the trust would then have insufficient assets to warrant continuation.

Despite strong relative performance ' its annual report to 31 January highlighted that it was third best among more than 50 funds investing in Europe over five years ' the trust is being wound up and we will therefore reluctantly be seeking a replacement Rated Fund for emerging European exposure.

Outcome of review: Templeton Emerging Markets Investment Trust

Background: Following Carlos Hardenberg's departure in the first quarter, the trust is lead-managed by Chetan Sehgal. He joined the group in 1995 and has been director of global emerging markets and small cap strategies since January 2016. In October 2015, he was named a senior research analyst on the trust and, later in June 2017, he was designated deputy portfolio manager.

Outcome: Retain as a Rated Fund. The trust should continue to benefit from a highly experienced emerging markets investor with a strong track record and well-resourced research team. He is supported by a team of over 80 investment professionals across 20 offices.

Global Bonds BACK TO TOP

Overview: The Bloomberg Barclays Global Aggregate Bond index posted a decent return of 3.3 per cent in sterling terms over the second quarter, but this would have been boosted by the strength of the dollar over the quarter. Indeed the two hedged-to-sterling bond funds, which did not benefit from dollar strength, fell slightly over the quarter.

Notable fund performance: Three index-tracking funds topped the group over the quarter, led by iShares Global High Yield Corporate Bond, up 4.8 per cent. Fellow ETF iShares Global Corporate Bond returned 3.7 per cent. Sandwiched between was index-tracking fund iShares Overseas Government Bond Index, up 4 per cent.

M&G Global Macro Bond was the best-performing actively managed Rated Fund, up 3.5 per cent. Aside from the aforementioned hedged-to-sterling funds, all other Rated Funds were in positive territory over the quarter.

Global Equity Income BACK TO TOP

Overview: The benchmark MSCI World High Dividend Yield index regained nearly all of its losses from the first quarter, returning 6 per cent. However, a strong dollar has flattered the returns available to sterling investors looking for global equity income. That is also largely the case with Rated Funds in this asset group, although some – notably Murray International – are in negative territory over the past six months.

Notable fund performance: Three actively managed funds beat the above benchmark, led by Artemis Global Income, up 7.6 per cent over the quarter, closely followed by Schroder Global Equity Income (7.1 per cent; see review below) and Fidelity Global Dividend (6.9 per cent). The last-mentioned fund has the second lowest yield at 2.8 per cent, but Bankers investment trust's yield is just 2.2 per cent. However, Bankers has a 51-year record of increasing its dividend, and aims to raise this at least in line with the retail prices index.

The only Rated Fund to lose money over the quarter was Murray International, the highly rated trust managed by Aberdeen Standard's Bruce Stout. It has more than 50 per cent of its portfolio in Asia Pacific and other emerging market equities, which helps to explain its loss of 3.3 per cent over the quarter. However its premium rating also fell by a similar amount, leaving the shares trading at close to net asset value.

Outcome of review: Schroder Global Equity Income

Background: Fund manager Ian Kelly left Schroders in March. He took over sole responsibility for running this fund in mid 2016, having been a co-manager since 2013. Simon Adler and Nick Kirrage took over the fund's management. Kirrage is co-head of the Global Value Team. Adler joined the team in 2016 and had been working closely with Kelly on the global funds with the aim of becoming co-manager.

Outcome: Retain as a Rated Fund. The Global Value team is still adequately resourced and should continue to add value over the long term. Performance since Kelly's departure is also encouraging.

Global Growth BACK TO TOP

Overview: Sterling strength in the first quarter was eclipsed by a rising dollar in the second quarter and a relatively buoyant US stock market, which accounts for more than half of the MSCI World index, which rose 8.1 per cent in sterling terms over the quarter. Eighteen Rated Funds – most of them more adventurous choices – beat the index return, some by a handsome margin, more than erasing losses in the first quarter.

Notable fund performance: Scottish Mortgage, the tech-heavy titan managed by Bailie Gifford, led returns over the quarter. Advancing 20.2 per cent, it was the second-best performer of all Rated Funds bar the specialist Guinness Global Energy. Edinburgh Worldwide, also managed by Baillie Gifford, returned 16.4 per cent from its more diversified portfolio of global smaller companies.

A cluster of five funds were up in the 12 per cent bracket: Lindsell Train Global Equity, SLI Global Smaller Companies, Rathbone Global Opportunities, Fundsmith Equity and T Rowe Price Global Focused Growth Equity.

But perhaps the most impressive turnaround in fortunes was that from Scottish Investment Trust, which we had placed under review three months ago (see below) and which returned 11.9 per cent.

Among eight index-tracking Rated Funds, the top-performer was L&G Global 100 Index trust. The worst was the exchange traded fund Vanguard FTSE All World UCITS, which tracks an index that includes emerging markets, which were weak over the quarter. Nevertheless the Vanguard ETF gained 6.8 per cent.

The worst performance came from Orbis Global Equity, with a 4.6 per cent return for investors in its Standard share class. However investors only pay a management fee if the fund beats the MSCI World index by 50 per cent, and receive a refund when it doesn't.

Outcome of review: Scottish Investment Trust

Background: Managed by Alasdair McKinnon since 2015, the trust has significantly refocused its portfolio in the past years, adopting a high-conviction, contrarian value investment process; streamlining its portfolio management team; and outsourcing its administrative functions. The contrarian value approach means that the manager has been looking into out-of-favour areas such as banks, food retail and energy that led the trust to underperform.

Outcome: Retain as a Rated Fund. Returns over the long term have been strong, but over the medium term, the trust has lagged the benchmarks and peer group, reflecting the trust's contrarian value style and avoidance of US and Chinese technology stocks. The combination of an experienced manager and a distinctive, structured process should continue to add value over the longer term. Recent quarterly results are encouraging in this respect.

Japanese Equities BACK TO TOP

Overview: One of the first quarter's most rewarding stock markets was one of the second-quarter's least lustrous, with the TSE Topix index returning 3.1 per cent in sterling terms. Nevertheless Rated Funds that focus on larger companies generally did better than those focused on smaller companies. Some of the high premiums on Baillie Gifford-managed investment trusts – particular Shin Nippon at nearly 12 per cent – have fallen back to more sustainable levels. It is 5.9 per cent on the aforementioned trust and a little lower at 5.4 per cent for Baillie Gifford Japan.

Notable fund performance: Last quarter's leader Legg Mason IF Japan Equity is this quarter's laggard, with a 0.45 per cent return. However, its short-term performance can be choppy and its long-term record is outstanding. The best return came from Lindsell Train Japanese Equity at 8.7 per cent, while the HSBC Japan Index tracker fund benefited from its exposure to both large and medium-sized companies – its 5 per cent return was usefully more than the Topix index.

Despite a 6 per cent fall in its premium, Baillie Gifford Shin Nippon returned 3.1 per cent to shareholders, while the 4.4 per cent return from the open-ended Baillie Gifford Japanese fund was marginally better than the Baillie Gifford Japan trust (3.4 per cent).

Mixed Assets BACK TO TOP

Overview: The rebound in equity markets in the second quarter after losses in the first has seen mixed asset funds that are highly weighted to equities regain their shine. Seven of 10 Rated Funds in the Mixed asset 61-100% Equity group beat the return from the FTSE Private Investor Growth index, which gained 5.8 per cent.

The four funds in the 41-60% Equity group were more of a mixed bag when measured against the FTSE Private Investor Balanced index (up 4.8 per cent), while six of the 10 funds in the 0-40% Equity group underperformed the FTSE Private Investor Conservative index return of 2.4 per cent.

Following a rebranding of the Old Mutual multi-asset fund range, the OM Cirilium Conservative Portfolio fund has been renamed Quilter Investors Ciriium Conservative Portfolio.

Notable fund performance: Two reasonably high-yielding funds took the honours in the second quarter. Shires Income, which currently has the bulk of its portfolio invested in UK equities, posted the best return at 9.3 per cent. That was closely followed by Threadneedle Monthly Extra Income, which has a similar portfolio, at 8.9 per cent.

The best growth-oriented returns came from Newton Multi-Asset Growth (see review below) at 8.1 per cent, and the evergreen Royal London Sustainable World fund, which gained 7.8 per cent. Its stablemate Royal London Sustainable Diversified was the best-performing fund in the 41-60% Equity group, returning 5.6 per cent.

Within the context of its asset mix, the most disappointing returns over the quarter came from MI Miton Cautious Monthly Income (1.59 per cent).'

Outcome of review: Newton Multi-Asset Growth

Background : Following the retirement of manager Chris Metcalfe, the fund is run by Paul Flood. Metcalfe ran the fund from March 2011 to the end of December 2017. Flood has been manager of the Newton Multi-Asset Diversified Return Fund and the Newton Multi-Asset Income Fund and will continue to manage these alongside the Multi-Asset Growth fund.

Outcome: Retain as a Rated Fund. Newton's multi-asset funds should continue to benefit from a team-based approach within a very well-resourced operation.

Property BACK TO TOP

Overview: Global property-related securities bounced back from a 7 per cent loss in the first quarter and performed very well in the second quarter, with the FTSE EPRA/NAREIT Global index gaining 9.6 per cent in sterling terms. UK direct property, as measured by the IPD UK All Property index, gained 1.4 per cent, in line with the first quarter.

Notable fund performance: Interestingly an index-tracking fund, iShares Global Property Securities Equity Index, tops the leaderboard with a 12.4 per cent return, beating our benchmark. Longer term its performance is in line with the index. The UK and Europe-oriented TR Property just failed to beat that, returning 11.9 per cent, with Fidelity Global Property matching that gain.

UK 'bricks and mortar' property trusts continue to prove popular, led by Picton Property Income, which gained 9 per cent.

Premium watch: Bluefield Solar Income

F&C Commercial Property's rising premium to net asset value helped it to a 7.6 per cent gain. But at 6.5 per cent, we would like to see that premium fall below 5 per cent before continuing to recommend the shares as a buyable Rated Fund.

Sterling Bonds BACK TO TOP

Overview : Sterling bond funds remain becalmed in the second quarter, with only the income they produce putting just a few funds into mildly positive territory on a total return basis. Benchmark indices are flat over the quarter, although corporate bonds, as represented by the Bloomberg Barclays Sterling Aggregate Corporate index, were mildly negative.

Baillie Gifford has changed the name of its Corporate Bond fund to Baillie Gifford Strategic Bond, which better reflects the fund's mandate to invest in other areas of the fixed income market.

Notable fund performance: Royal London Sterling Extra Yield Bond was the best performer with a return of 1.35 per cent. In contrast Schroder High Yield Opportunities fell 0.74 per cent, although the worst-performing Rated Fund was GAM Star Credit Opportunities GBP, which fell by 1.8 per cent. This fund and the aforementioned Royal London fund continue to be the best performers over three years.

The three Rated Funds with the highest current income yields are Schroder High Yield Opportunities (6.4 per cent), Royal London Sterling Extra Yield Bond (5.5 per cent) and Artemis High Income (5.4 per cent).


Overview: UK shares bounced back from a torrid first quarter, with the FTSE 100 index up 9.6 per cent and the wider FTSE All-Share up 9.2 per cent, which made up for the 6.9 per cent fall in the first three months. The FTSE UK Divdend+ index also registered a strong 8.5 per cent rebound. The rise in the value of the US dollar against sterling raised share prices of index constituents that derive earnings overseas.

Notable fund performance: SPDR S&P UK Dividend Aristocrats, an exchange traded fund, stormed up to second place in the this quarter, returning 11.1 per cent. However its performance year to date is mildly negative and over one year it has fallen by 4.4 per cent.

In contrast, Threadneedle UK Equity Income, this quarter's best-performing fund with a 12 per cent return,' has returned 6.4 per cent year to date and is up 5.7 per cent over one year. Its three-year performance of 31.5 per cent outshines the SPDR ETF, which is up just 8.1 per cent with income reinvested.

Other 'core' UK equity income selections performed admirably, including Jupiter Income (up 9.8 per cent), Royal London UK Equity Income (9.2 per cent) and TB Evenlode Income (9.3 per cent; see review below).

Among more adventurous choices, the smaller company focused MI Chelverton UK Equity Income fund returned a healthy 9.5 per cent, and Temple Bar investment trust returned 9.4 per cent, despite a 2 per cent widening in its discount to net asset value.

Three investment trusts prop up the bottom of the table over the quarter. Core selection Troy Income & Growth returned 4.4 per cent, with its defensive positioning not helping the shares, which moved from a small premium to net asset value to a 1.7 per cent discount.

Diverse Income Trust also suffered a 5 per cent reversal in its rating, with the shares now trading at a 2 per cent discount. That move from a premium saw the trust returning just 0.8 per cent over the quarter.

The second worst performer with a return of 3.3 per cent was Lowland investment trust. Its shares also moved to a slightly wider discount at -6.7 per cent to net asset value.

The three Rated Finds with the highest current yields are Premier Optimum Income at 7.4 per cent (see review below), tracker fund Vanguard FTSE UK Equity Income Index at 4.6 per cent and Man GLG UK Income at 4.5 per cent.

Outcome of review: Premier Optimum Income

Background: Chris White and Geoff Kirk have managed the fund since October 2017. White focuses on the management of the fund's UK equity portfolio. Kirk focuses on the management of the fund's covered call option strategy. From 1 October 2017, the fund targets an annual yield of 7 per cent. Prior to that there was no target yield. The fund suffered a very poor first quarter relative to its peers and was also behind the benchmark over one year.

Outcome: Retain Rated Fund status. Performance was hurt due to the fund's exposure to Conviviality, which went into administration in March. The holding represented around 2 per cent of the fund. The fund should continue to benefit from a highly experienced fund manager with a strong track record and well-resourced team.

Outcome of review: TB Evenlode Income

Background: The fund is 'soft-closed' with an initial charge of 5 per cent levied to all purchases made by new investors, however existing investors are not affected. Clients of our sister website interactive investor can continue to purchase without initial charges levied.

Outcome: Retain Rated Fund status for existing investors only. We retain our conviction in fund managers Hugh Yarrow and Ben Peters and their approach.


Overview:The FTSE 100 index gained 9.6 per cent and the FTSE 250 index of medium-sized companies gained 8.1 per cent, more than making up for losses in the first quarter. The fall in the value of sterling against the US dollar over the quarter – from $1.40 to $1.315 – raised share prices of index constituents that derive earnings overseas.

Notable fund performance: Mercantile investment trust continued its relatively strong run from the first quarter, posting the highest gain in the asset group of 12.8 per cent. Fellow adventurous selection Unicorn UK Growth also usefully outperformed the All-Share index with a 10.8 per cent gain, having been the worst-performing fund in the first quarter.

Several core choices also posted index-beating gains over the quarter, led by Threadneedle UK Growth and Income, up 12.3 per cent. The fund also has a decent yield at 3.4 per cent, although the 2.7 per cent yield from the FTSE 250-focused Mercantile is not to be sniffed at. Liontrust Special Situations and Royal London Sustainable Leaders also posted quarterly gains in excess of 10 per cent.

Having been two of the most resilient among the adventurous choices in the first quarter, Fidelity Special Values and MI Chelverton UK Equity Growth prop up the performance table in the second quarter, returning a still-respectable 5.3 per cent and 6.1 per cent respectively.

Outcome of review: Old Mutual UK Dynamic

Background: The fund reached full capacity and is closed to new investments.

Outcome: Although no longer a Rated Fund, existing investors do not need to take any action provided it continues to meet their needs. There are no restrictions on the sale of units in the fund.

UK Smaller Companies BACK TO TOP

Overview: UK smaller companies continue to prove popular with investors. However, having lost less than the FTSE All-Share and FTSE 100 indices in the first quarter, benchmark indices also performed well in the second quarter. The FTSE Small Cap index gained 7.1 per cent and the Numis Smaller Companies + AIM (excluding investment companies) index rose by 6 per cent. Strong outperformance from three Rated Funds saw them make the top 10 among all Rated Funds.

Notable fund performance: Aided by a 4.2 per cent contraction in its discount to net asset value, shares in BlackRock Throgmorton topped the leader board with a 16.9 per cent gain over the quarter as investors warmed to the trust's new management structure that differentiates it from BlackRock Smaller Companies (see review below).

Henderson Smaller Companies and TB Amati UK Smaller Companies gained 14.2 per cent and 13.8 per cent respectively, with the former's share price return also aided by a 3 per cent contraction in its discount over the quarter.

In stark contrast, the discount in shares of Standard Life UK Smaller Companies trust widened by as much as 8.3 per cent over the quarter to just over 9 per cent, which explains its poor showing over the quarter, with a return of just 1.4 per cent. In June the '160 million Dunedin Smaller Companies trust announced that it has agreed merger terms with the Standard Life trust managed by Harry Nimmo, who will have a larger £550 million portfolio to manage.

Under review: Strategic Equity Capital

'The worst-performing Rated Fund was again Strategic Equity Capital, which followed the first quarter's 5.9 per cent loss with a further 2.2 per cent loss, exacerbated by a further fall in its discount to more than 16 per cent, close to its lowest point in the past three years. Returns from the trust are expected to be lumpy, as it is managed in a private equity style. However, as the trust has failed to provide investors with any gain over the past three years, we are placing the trust under review and will report back our findings in the next quarterly review.

Outcome of review: BlackRock Throgmorton Trust

Background: To simplify the investment trust's proposition the board replaced the trust's dual structure under which co-manager Mike Prentis ran a 'long-only' portfolio alongside a separate portfolio of contracts for differences (CFDs) under Dan Whitestone. In order to raise its profile and distinguish itself from the BlackRock Smaller Companies trust that Prentis also runs, Throgmorton is now managed as a single portfolio by Whitestone. He retains the flexibility to use CFDs. The trust can also invest in Aim-listed shares without the previous 15 per cent of portfolio value restriction.

Outcome: Retain as a Rated Fund. This is a logical change and the fund manager should continue benefit from the broad range of tools and the wider opportunity set available to him. Recent performance and discount contraction indicate that investors have warmed to the changes.'


Overview: For UK investors, the surge in the dollar's value against sterling over the quarter transformed a respectable 3.3 per cent gain from the S&P 500 index into one of more than 9 per cent. Nearly all 18 Rated Funds beat the index's performance over the quarter, some quite handsomely. The exception was an exchange traded fund that targets low volatility. Technology and smaller company-oriented Rated Funds led the gains.

Notable fund performance: Artemis US Smaller Companies topped the leaderboard with a return of 18 per cent. US investing veteran Cormac Weldon has an excellent record of delivering good returns through various market cycles, and this quarter's strong return accounts for the lion share of gains over the past year (22 per cent).

Two index-tracking exchange traded funds were close behind: Invesco EQQQ Nasdaq UCITS rose by 15.4 per cent, a performance that was matched by iShares S&P SmallCap 600 UCITS.

Aberdeen Standard-managed North American Income trust bounced back from a relatively disappointing year: its 14 per cent gain over the quarter took its gain over the past year to 17.5 per cent and was aided by a 4 per cent contraction in its discount to net asset value over the quarter.

The performance of two Rated Funds that had given cause for concern in the first quarter review picked up in the second quarter. Fidelity American Special Situations returned 10.4 per cent, but this still placed it in the third quartile of its peer group, so we will be expecting further signs of positive progress in the next quarter. JPMorgan US Smaller Companies trust registered a superior 13.8 per cent return, which is more encouraging.

Specialists BACK TO TOP

Notable fund performance: Some specialist Rated Funds have proved to be very rewarding over the past quarter, and none more so than Guinness Global Energy, which was the best performer among all actively managed Rated Funds in this quarter, returning 23 per cent.

Top honours, however, go to the exchange traded commodity ETC Brent 1mth, which rose by 26.8 per cent. It was aided not only by a rocketing oil price but by the strength of the dollar against sterling, which also boosted returns of all funds with high global or US exposure.

A clutch of specialists in the technology and biotechnology arenas also performed with credit, headed by Allianz Technology trust, where the 17.8 per cent gain was boosted by a 3.5 per cent improvement in its rating. The share now trade at a 2 per cent premium to net asset value. International Biotechnology Trust, Worldwide Healthcare Trust and Polar Capital Biotechnology recorded gains of 11.3, 10.9 and 10.7 per cent respectively.

Only gold failed to participate in a widely dispersed rally in commodities, as reflected in the paltry 0.3 per cent return from iShares Physical Gold ETC. However, the actively managed LF Ruffer Gold, which invests in gold and gold-mining shares, registered a more pleasing 5.8 per cent return, despite weakness in the underlying price of the yellow metal.

Premium watch: Bluefield Solar Income

The high and regular income attractions of Bluefield Solar Income have seen the premium on the shares rocket to 11.2 per cent, roughly double the level at the end of the first quarter. Despite the shares continuing to yield 6.1 per cent, we would not suggest buying the shares at a premium of more than 6 per cent. In the past three years the shares have traded at a premium as high as 13.3 per cent and a discount as low -6.6 per cent.

Subscribe to Money Observer Magazine

Be the first to receive expert investment news and analysis of shares, funds, regions and strategies we expect to deliver top returns, plus free access to the digital issues on your desktop or via the Money Observer App.

Subscribe now

Add new comment