The best and the worst: Insurance Funds - UK Equities

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The Independent Online
OVER the past five years, some of the top-performing UK equity insurance funds grew by 100 per cent or more, while investors in a number of others will have lost money.

The top performer over five years, the Beehive Standard fund of the Tunbridge Wells Equitable friendly society, is closed.

Hill Samuel's financial trust, which came second, has been one of the top 10 trusts every year for the past seven.

Leigh Harrison, the fund's manager, said that since taking over in 1988 he has pursued an aggressive but also highly active strategy. This has meant, for example, dropping some smaller companies when they were on their way down in the late 1980s, and taking advantage of their growth from 1991 onwards.

A common feature of the top and the worst-performing funds is their relatively small size - no more than pounds 10m or so. This has the benefit of producing large gains if the investment choices are good. However, should just one or two mistakes be made, investors end up paying the consequences for several years.

Gregor Logan, head of investments at MGM, whose Special Situations fund was in bottom position, said: 'The position is that, up to October 1987, the fund had performed very well. My predecessor was very keen on smaller companies and the fund was very aggressive. After the crash, a decision had to be made whether to stay with smaller companies or spread the risk. They made the wrong decision and stayed with smaller companies.

'The recession lasted longer and was deeper than expected, which meant that performance was tainted for several years.'

----------------------------------------------------------------- Table: INSURANCE FUNDS: UK EQUITIES ----------------------------------------------------------------- The best % 1 Tunbridge Wells Beehive 130.0 2 Hill Samuel Financial 126.2 3 Liberty Blue Chip 118.5 4 Tunbridge Wells Prize Plan Tax 110.9 5 Equitable Fund of Investment Trusts 108.3 The worst 170 Continental Equity -7.5 171 City of Westminster Equity -7.8 172 Windsor UK Equity -14.0 173 Century Life Smaller Companies -19.1 174 MGM Special Situations -42.0 The chart shows fund performance over five years to January 31, 1994. Offer to offer; net income reinvested. ----------------------------------------------------------------- Source: Hindsight by Hardwick Stafford Wright. -----------------------------------------------------------------