Equity funds race ahead

Nic Cicutti on a popular sector

As the world's financial markets betray the first hints of nervousness after two years of almost uninterrupted growth, the problem of how to continue making gains suddenly assumes greater importance. With almost pounds 20bn in funds, the UK equity growth sector is by far the most popular for hundreds of thousands of investors.

Average returns for this sector have been respectable in the past 12 months. HSW, the statistics provider, calculatesthe average growth in the value of the 149 funds around since 1 December 1995 was 9 per cent. In the past two years, returns have averaged 30.9 per cent.

The figures show some remarkable variations, including the measly 1.6 per cent advance achieved by Eagle Star's Environmental Opportunities fund and the 0.4 per cent loss nursed by Exeter's Capital Growth unit trust.

But other funds have raced ahead, Baring's UK Growth trust achieving 17.4 per cent in the past 12 months, Lincoln National's 22.3 per cent and Johnson Fry Slater Growthshowing 46.2 per cent growth.

For investors, the most important aspect of any decision on where to place their money is not just a record over one or two years but a fund's long-term performance.

The unit trusts in the graph above have all achieved that longer-term performance, remaining consistently in the top 25 per of funds in the sector almost every year in the past seven. Some have done so even longer. But while the returns are all good, the management style can differ.

Richard Royds, managing director of Mercury Asset Management's unit trust operation, says his company's Recovery fund, which shows returns of 104 per cent in five years, is based on its managers' willingness to change tack if they believe the markets arechanging. "We changed our manager some months ago when Paul Harwood, head of our specialist unit, took it over," Mr Royds says. "The performance up to then had been very good but this gave us the opportunity to look again at where the fund was going."

Until Mr Harwood took over, the Recovery fund portfolio had been heavy on small to mid-market firms quoted on the London Stock Exchange. Since then, given market volatility, he has placed greater emphasis on FTSE 100 shares.

Fidelity's Special Situations Fund is another to have delivered consistent returns, with growth of 148.7 per cent placing it in fourth position over five years and first, with 293.9 per cent, over 10 years.

A Fidelity spokeswoman says: "The fund manager is Anthony Bolton. The way he selects his stocks is that almost any share may at some time represent a special situation. Generally, valuations will be attractive in relation to net assets or earnings potential, with additional factors involved which may have a positive influence on share price."

For example, the fund will look out for companies in recovery situations, new technology, or bids. Investors should beware that the fund's bias towards smaller and medium-sized companies can lead to short-term volatility relative to the benchmark.

Jim Campbell, who manages one of the smallest funds in the sector with barely pounds 2.5m, the Commercial Union PPT UK Growth Fund, has also remained in the top 30 over the past five years, delivering overall returns of 97.8 per cent. He says: "Because it is a smaller fund, it is possible to be much more aggressive. The risk is greater but so is the reward."

The Commercial Union fund will hold shares in about 50 companies, less than is usual. But Mr Campbell says: "I can concentrate on stocks I like. But the volatility of the market means more bottom-up stock selection."

Jeff Sanders, fund manager at Standard Life, also believes in careful stock selection for his UK Equity Growth fund, which has delivered returns of 148.5 per cent in the past seven years.

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
News
The Swiss Re tower or 'Gherkin' was at one time the UK’s most expensive office when German bank IVG and private equity firm Evans Randall bought it
news
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
Sport
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
football
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
The Great British Bake Off 2014 contestants
tv
Arts and Entertainment
filmThe Battle of the Five Armies trailer released
News
news
Arts and Entertainment
Beast would strip to his underpants and take to the stage with a slogan scrawled on his bare chest whilst fans shouted “you fat bastard” at him
musicIndie music promoter was was a feature at Carter gigs
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
Extras
indybest
News
Performers dressed as Tunnocks chocolate teacakes, a renowned Scottish confectionary, perform during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
news
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
Life and Style
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Finacial products from our partners
Property search
Sell it with flowers: competition is 'intense' for homes with outside spaces

Gardens add a tenth to the value of your home

A London estate agent yesterday put a price on having a garden. David Pollock of Greene & Co reckons it can increase a property's value by a tenth.

Spectators at the Isle of Wight music festival watch the World Cup on the big screen. Betting promotions were a feature of the tournament
Lenders have been accused of persuading vulnerable people to borrow expensive credit

Payday loan firms accused of bombarding vulnerable people with nuisance phone calls

Payday loan firms have been accused of bombarding financially vulnerable people with nuisance phone calls, after a debt charity reported that a third of its clients were plagued by the messages.

The foundation proposed that the Government sets up a scheme to help people avoid losing their homes

Mortgages: 'Homeowners could trade down to shared ownership to defuse rate rise timebomb'

A plan to defuse a “mortgage debt timebomb” when interest rates rise is published today amid warnings that 2.3m households could struggle with their repayments.

Current accounts are too costly and confusing, says CMA as it announces investigation into Britain's biggest banks

Competition regulator to investigate market where it's hard for customers to make comparisons and the big banks' charges can be set too high
All the signs have been pointing up for buy-to-let, but there are clouds on the horizon

Buy-to-let: is it a boom or a bubble fit to burst?

People borrowing to be landlords could face the same restrictions as homebuyers, with MPs voicing fears that property speculation may be overheating the market

Moment of truth for payday lenders: Watchdog plans to curb cost of short-term loans

The chief of the City watchdog, Martin Wheatley, spoke exclusively to The Independent's Simon Read about its attempts to control the worst excesses of unscrupulous high-cost credit companies

Consumers given power to choose a green deal

How would you like to be able to choose how your electricity is made and even where it come from? It may sound futuristic and fanciful but the independent supplier Co-operative Energy has made it a reality this week.

'Scrap the trap': calls for change grow as banks are told to play fair with loyal savers

City regulator says existing customers suffer worst rates

Motor insurers divided on proposals for whiplash ban

MPs want medical evidence for claims. Will this bring higher premiums?

British Gas repays £1m for mis-sold deals

British Gas was yesterday forced to pay back £1m to its customers after mis-selling them energy deals.

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Fund Administrator - Edinburgh - £22 p/hr

    £20 - £22 per hour + competitive: Orgtel: Senior Fund Administrator, Top Four ...

    Entry Level Fund Accountant (Edinburgh)

    £17 - £20 per hour: Cameron Kennedy Recruitment: My client, one of the worlds ...

    SQL DBA/Developer

    £600 per day: Harrington Starr: SQL DBA/Developer
 SQL, C#, VBA, SQL Server, ...

    Risk Analyst - VBA/EXCEL

    £300 - £600 per day: Harrington Starr: Risk Analyst Access, EXCEL, VBA, RISK, ...

    Day In a Page

    The children were playing in the street with toy guns. The air strikes were tragically real

    The air strikes were tragically real

    The children were playing in the street with toy guns
    Boozy, ignorant, intolerant, but very polite – The British, as others see us

    Britain as others see us

    Boozy, ignorant, intolerant, but very polite
    Countries that don’t survey their tigers risk losing them altogether

    Countries that don’t survey their tigers risk losing them

    Jonathon Porritt sounds the alarm
    How did our legends really begin?

    How did our legends really begin?

    Applying the theory of evolution to the world's many mythologies
    Watch out: Lambrusco is back on the menu

    Lambrusco is back on the menu

    Naff Seventies corner-shop staple is this year's Aperol Spritz
    A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

    A new Russian revolution

    Cracks start to appear in Putin’s Kremlin power bloc
    Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

    Apartheid’s sadistic killer that his country cannot forgive

    The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
    Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

    Standing my ground

    If sitting is bad for your health, what happens when you stay on your feet for a whole month?
    Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

    Greene prays for chance to rebuild after injury agony

    Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
    Israel-Gaza conflict: Secret report helps Israelis to hide facts

    Patrick Cockburn: Secret report helps Israel to hide facts

    The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
    The man who dared to go on holiday

    The man who dared to go on holiday

    New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
    Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

    Best comedians: How the professionals go about their funny business

    For all those wanting to know how stand-ups keep standing, here are some of the best moments
    The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

    The Guest List 2014

    Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
    Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

    Jokes on Hollywood

    With comedy film audiences shrinking, it’s time to move on