Active funds double returns of passives
In the chaotic sell-off of the global pandemic, and subsequent rebound, active managers outperformed...
Research from Quilter found that active equity fund managers outperformed their market indices in seven of the ten major sectors during 2020 – only those running equity income funds struggled to keep up, while the average US equity fund was in line with the index.
In a year of huge dividend cuts around the world, it’s perhaps not surprising that funds in the UK and global equity income sectors struggled. But overall it was a great year for active management. There were big chunks of every index that struggled and, instead of being stuck with COVID losers, active managers were able to change positioning quickly if they wanted to and make the most of valuation opportunities at the bottom of the market.
Interestingly, the best performing Elite Rated funds and trusts in 2020 were in a variety of equity markets. Some you would expect to have done well (the US and technology) but others – like Japan and emerging markets, were maybe more of a surprise for investors.
But which funds and trusts have had the strongest start to 2021?
Four of the best performing funds and trusts so far this year are Chinese equity offerings. Another three invest in the wider Asia region.
The North Asian economies of China, Korea and Taiwan, which make up the bulk of the investible universe in Asia, have been more successful in containing the pandemic and their economies have reopened a lot earlier than developed markets.
This has given them a head start going in to 2021, as both the US, Europe and the UK are still fighting to contain second and third waves. The Asian consumer, sentiment and growth prospects are also stronger, while valuations are more reasonable. So it’s perhaps not a surprise their stock markets have started well.
Longer term the rising Asian consumer and middle classes will give the continent a structural boost and the new regional free trade agreement should gain legs. It all bodes well for this area of the world and some fund managers have suggested this could be Asia’s decade.
|Rank||Fund/Trust name||January returns for funds*||January returns for indices*|
|1||Premier Miton US Smaller Companies||9.72%||1.14%|
|2||Fidelity China Special Situations||9.57%||6.72%|
|3||Invesco China Equity||9.28%||6.72%|
|4||JPM China Growth & Income||8.36%||6.72%|
|5||Baillie Gifford Global Discovery||8.23%||-0.90%|
|6||Baillie Gifford American||6.47%||1.14%|
|7||FSSA Greater China Growth||5.79%||6.72%|
|8||JPM Asia Growth||5.21%||0.41%|
|10||Fidelity Asia Pacific Opportunities||4.95%||0.41%|
*Source: FE fundinfo, total returns in sterling, 1 to 31 January 2021. Indices used for comparisons: FTSE China, FTSE North America Small Cap, FTSE Developed Asia Pacific ex Japan, FTSE All World and FTSE North America