Number of consistent top-quartile funds drops below 1% over three years

The quarterly survey found only nine of the 1,138 funds (0.8%) in the principal 12 Investment Association sectors that boast a three-year track record had achieved top-quartile returns in each of the last three 12-month periods.

This 0.8% figure was well below the historical average of between 2% and 5%, while eight sectors failed to produce a single top-quartile fund over the period.

The firm attributed the poor performance to geopolitics and central bank policies impacting the market, especially in the first few months of 2017.

The IA Emerging Markets sector was the most consistent in terms of returns, with 3.3% of funds achieving the F&C MM Solutions consistency ratio.

The Sterling Strategic Bond, Sterling Corporate Bond and UK All Companies sectors also produced funds with top-quartile returns (2.9%, 2.6% and 1.2% of the funds in each sector, respectively).

Lowering the hurdle rate to simply above-median returns in each of the last three 12-month periods saw 124 of the 1,138 funds delivering above-median returns consistently. This means this less demanding ratio also fell, to 10.9% from 11.9% in the first quarter.

The Sterling Corporate Bond sector came top on this measure, with a quarter of the funds in the sector delivering above-median returns.

This was followed by the Global Equity and Sterling Strategic Bond sectors ,which had 18.4% and 15.9% of funds achieving above-median returns, respectively.

Kelly Prior, investment manager for F&C multi-manager solutions, said: "In the first quarter of 2017, our survey revealed an unusually low number of funds achieving consistent top-quartile returns.

"This is not surprising given how much markets were impacted by geopolitical factors and central banks policies. Politics exerted significant influence on the direction of currencies of the affected economies.

"Despite the Federal Reserve raising interest rates, the dollar fell back as confidence in the ability of US President Donald Trump to push through market friendly policies fell.

"However, the yen was the beneficiary of this, making solid ground over sterling as a perceived safe haven currency."

She added: " In recent times politics has taken the baton from central banks as the drivers of sentiment for markets. We find the current calm waters unnerving and certainly do n0t expect a surge in consistency from here."

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• Topics
• Multi-manager
• fund performance
• funds
• BMO Global Asset Management
• F&C

About the author

• 
• Tom Eckett
• @TomEckettIW

Tom joined Investment Week in August 2016 as an asset management correspondent covering the ETF beat.

Outside of the office he is a keen cricket, football and boxing fan and runs his own sports website. 

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