How market volatility creates investment opportunities
Hugh Sergeant, manager of ES R&M UK Recovery, joins us this week to talk about all the...
The US made a late comeback to finish top of the medal table at the Tokyo Olympics. It may not have been its best Games ever, but Team USA got the job done – and it pipped rival China to the post while doing so.
In the history of the Summer Olympics, the United States has, in fact, been the most successful nation, with a combined total of more than 2,600 medals in 28 Olympic Games – more than 1,000 of which have been gold.
But against the odds, it was Team GB that made modern history. Not only did Team GB match its medal haul at London 2012, but its women – who outnumbered its men at the event – contributed 28 of the 65 medals won. Impressively, these achievements were also spread across a record 24 disciplines.
When it comes to investments, all eyes have similarly been on the US stock market in recent times. It led the world out of the Covid crisis, and the S&P 500 is close to all-time highs. The big internet giants of Amazon, Microsoft, Apple and the like have all seen their share prices rise exponentially and have taken the rest of the US stock market with them.
Indeed, since the market lows of 23 March 2020, the S&P 500 has returned 64%* for investors, while our own FTSE 100 has been left trailing behind, with returns just shy of 49%*. More depressingly, the FTSE 100 is still trading around the 7,000-mark – a level where it started the millennium more than 20 years ago.
Thankfully for investors, there is much more to our economy than our largest 100 companies. There are hidden depths and breadth to the British stock market, just as there was in Team GB. We have a plentiful supply of very good firms that may be in less headline-grabbing sectors than those in the US, but which are nevertheless industry leaders. What’s more, we have an abundance of talented fund managers – the skills of which have been displayed perfectly since the stock market plunge last year.
The average UK equity fund has returned almost 70%* since the market lows – twenty percentage points more than the FTSE 100 and five percentage points more than the S&P 500. And that’s the average fund. The best performers have returned far more, displaying nicely the advantages of active management.
And just as we have plenty of talent, we also have plenty of funds from which to choose: 215 out of 248 (89%*) funds in the IA UK All Companies sector beat the FTSE 100 over the period we’ve been discussing, and the choice of style and segment is plentiful.
Those looking to invest in UK equities or top up holdings may like to browse our Elite Rated and Radar UK equity offerings.
|Rank||Fund name||Percentage returns since 23 March 2020*|
|1||TM CRUX UK Special Situations||130.4%|
|2||MI Chelverton UK Equity Growth||128.3%|
|3||Marlborough Special Situations||125.9%|
|5||ES R&M UK Recovery||93.7%|
|6||Marlborough Multi-Cap Growth||89.3%|
|7||ASI UK Ethical Equity||89.1%|
|8||AXA Framlington UK Mid Cap||82.6%|
|9||Ninety One UK Special Situations||80.4%|
|10||VT Downing Unique Opportunities||77.9%|
*Source: FE fundinfo, total returns in sterling of the FTSE 100, S&P 500 and the IA UK All Companies sector, 23 March 2020 to 9 August 2021
^Source: Schroders – Five years since Brexit: four charts to show UK shares could be returning to favour – chart figures to 25 May 2021