A handful of star fund managers have produced exceptional returns during the downturn, while the Cautious Managed sector and many others wallow in negative territory, according to HFM Columbus.
The wealth manager said BlackRock, Resolution Argonaut and First State prove fund managers can use the current diversity in stock and sector returns to outperform in a credit crunch.
“Mark Lyttleton at BlackRock has put the arguably overpaid and overrated hedge fund community to shame with his market-neutral UK Absolute Alpha,” said Rob Pemberton, investment director at HFMC. The fund returned 16% for the year ended June 2008, a period over which the FTSE All-Share fell 13%.
Also protecting capital is Barry Norris, whose Resolution Argonaut European Alpha fund managed a completely flat return over the same period, he said.
Pemberton believes the Asian team at First State and most of the Neptune teams have proved there is still plenty of value in emerging markets. The Neptune Russia & Greater Russia fund returned 22.8% for the year.
However, many fund managers have failed to recognise value traps in domestic UK stocks, according to HFMC's study. Luminaries such as New Star’s Stephen Whittaker, whose UK Growth fund slipped 36.4%, Carl Stick’s Rathbone UK Special Situations and Bill Mott’s PSigma Income fund are all “unexpected entries in this hall of shame”, said Pemberton.
Overseas funds have also seen some shocking losses, with the once popular Legg Mason US and Japan funds both shedding over a third of their value, he added.
“The Cautious Managed sector is perhaps the best example of where managers would have been expected to have protected investor losses but have singularly failed,” said Pemberton. Some of the largest and most widely regarded funds in the sector have sustained the heaviest falls, including Midas, New Star and Investec, he said.
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Short-term noise or something sinister?