This year's top-performing funds were absolutely dominated by two sectors: Russia and Biotechnology....
This year's top-performing funds were absolutely dominated by two sectors: Russia and Biotechnology. Of the top 30 performing funds for the twelve months up to 1 November 2000, 22 fell into one of those two categories - 10 being Russian funds, while 12 were investors in healthcare and biotechnology. The funds are taken from Standard and Poor's entire offshore universe.
The top performer was the Ashmore Russian Debt fund, with 235% return over the 12 months to November. The next-best performing Russia fund was the Firebird New Russia Fund, which came in fourth place with 171.37%.
However, the price for this performance has been high volatility, both these funds hitting just under 20%, the average among the top performing Russian fund. Meanwhile the Biotechs in the top 30 settled at closer to 14% on average. As would be expected, this compares poorly with the average volatility for all the offshore funds Micropal lists, which is 5.07%. In similar measure, these funds are hugely above the norm for the year, over which time Micropal's 6006 offshore funds have managed to stay pretty much flat, hovering at 0.08% return over the twelve-month period.
Number 20 in the list of best performers is ranked six in the Russian equity fund sector. It is the Schroders Russian Region fund and has returned 107.55% in the 12 months to November. In determining the success of the sector, the manager points to favourable inflation and, crucially, a supportive political environment.
Unsuprisingly, the top ranking biotechs are significantly larger than their Russian counterparts. The largest fund in the top five and the second largest in the top 25 is the Clariden Biotechnology Equity fund. The $600m fund's 181% performance can be attributed largely to the scientific environment. The human genome has been decoded and a full sequence description will soon be available. This has led to an explosion in the share prices of companies that work on pharmacogenomics, aiming to produce the next generation of diagnostic tests.
Clariden is very excited by another, relatively new area of research: proteomics. In this companies try to characterise proteins in advance of clinical trials. This is an expensive and arduous task, but the potential benefits are enormous.
Finally, those companies that are providing the research tools (both soft and hardware) for all this work are making a healthy profit.
According to a Morgan Stanley Dean Witter report in the second quarter of this year, today's 400 targets for drugs will increase to 4,000 during the upcoming decade.
The Pictet GSF Biotech fund is ranked seven, having risen 158.62% with 14.44% volatility. As interest in the sector grows, the number of competitors grows with it. Manager Michael Sjostrom spends two to three months every year visiting companies. He has a substantial scientific advisory body, made up of luminaries from various medical and biotechnical fields to call on for judgements as to the viability of certain technologies.
He claims that 90% of the world's investible biotechnology firms are in the US, and although his fund is European based, he is only a little under, with an 80% US exposure. He believes that the ongoing success of the human genome project supports the sector in the long term.
Sjostrom tends to avoid companies that create the hardware needed for DNA analysis, and instead invests in drug companies that have used the technology and already have several products in the pipeline.
Hires Wellington Management
Introduces 'The Long Dog'
Continuing Square Mile’s series of informal interviews
Happy GDPR day