Five UK funds with returns over 10% this year

After giving UK equity funds a lot of attention in the latter half of last year as the Brexit vote caused the stock market to soar, our focus in 2017 has turned to European elections and a Trump presidency. But in the background, the FTSE All Share has continued to climb, returning a respectable 6.9% in the year-to-date^.

Many of our Elite Funds have done even better and five Elite Funds have delivered total returns of more than 10% since the start of January*.

The bets are now rolling in for where the UK stock market will end the year — ahead, behind or on par with where it began — and our own poll last month revealed a great deal of uncertainty among investors. UK inflation hit a four-year high earlier this week, which certainly caused a short-term spike in the market, although the longer-term affects of rising prices on corporate profits can be mixed.

What’s more, when negotiations do finally get under way to exit the European Union (one hopes after the election), stocks may become a lot more volatile than they have been since the referendum.

Sadly, we don’t have a crystal ball, but we can highlight these five funds whose managers have strongly outperformed in the current climate. As always, it’s important to remember that past performance is not a guide to future returns.

L&G UK Alpha Trust – up 18.8%*

Richard Penny, manager of Elite Rated L&G UK Alpha Trust, is a calmly confident stock picker who is adept at not getting ‘swept up’ in the excitement of a rising market. He looks for ‘unloved’ companies at bargain prices and always considers how much growth a stock has to come, not just by how much it has already grown. His most-held sectors are healthcare and technology.


Man GLG Undervalued Assets – up 15.2%*

Henry Dixon and Jack Barrat also invest with a value-driven mindset – which means, put simply, they look for cheap shares. They have an unusual screening process that helps them to find some unusual stocks, and Henry has a long track record running the strategy, both within this fund from 2013 and before that for many years at another company called Matterley. The fund is notably underweight energy, where Henry and Jack do not currently see many well-priced opportunities.

Standard Life Investments UK Ethical – up 14.3%*

This fund’s ethical mandate means it is automatically quite different to the broader UK stock market, as it won’t typically hold energy, oil or gas stocks, nor big tobacco firms. Gambling is also off the cards. Manager Lesley Duncan and her team will also keep a very close watch on each and every company in which they do invest, and if they judge a business has become unethical, they will sell out. Another of our Elite Rated ethical funds, EdenTree Amity UK, has also done very well in the year-to-date, solidly beating the market to return 8.6%*.

Franklin UK Mid Cap – up 12.5%*

This fund stands out in this list for being a very pure play on Britain’s medium-sized companies. The portfolio is also very concentrated, with manager Paul Spencer holding just 35 stocks at present. This means that if a stock does well, its impact on the fund’s returns is greater. (Of course, if a stock does badly, the same principle applies in reverse.) To invest successfully using this strategy, Paul carries out extensive analysis and forecasting for every single company he buys, and knows the business, balance sheet, management and valuation risks inside out.

Jupiter UK Growth – up 10.9%*

Jupiter UK Growth has had a strong start to this year, although it is worth mentioning it struggled in the second half of last year with its strong exposure to the UK domestic economy. Its regained ground in 2017 brings it back up to roughly where it sat the day before the Brexit vote. The fund has a nice mix of growth and recovery stocks, and manager Steve Davies keeps his process simple and straightforward. With its roughly 40% weighting to consumer services and goods, and another 27% to financials, this is a fund for those who feel confident about the UK economy’s prospects through the Brexit process.

^FE Analytics, FTSE All Share, total returns in GBP, 01/01/2017 – 18/05/2017 *FE Analytics, Elite Funds in IA UK All Companies, total returns in GBP, 01/01/2017 – 18/05/2017

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.