Popular funds that failed in 2017 – and why you shouldn’t sell

Last year was highly unusual in that all major assets – from shares to bonds, commodities and property – recorded increases in value. But many fund managers failed to generate market-beating returns, and some even lost money.

That shouldn’t necessarily mean you sell. Many managers follow trends that take several years to prove themselves. Others may have suffered a temporary blip. We asked professional fund analysts which of 2017’s underperformers they would still back in 2018 and beyond. JPM Emerging Markets Income fund performed 17pc better than the top performer of 2017, Baillie Gifford Emerging Markets. However, the returns last year were more than 20pc lower than the Baillie Gifford fund. Mr Dennehy said its fortunes would reverse again.

The £4.4bn Troy Trojan fund invests across a range of investments from British and overseas shares to gold and bonds. Rather than pegging its returns to a stock market index, it instead aims to deliver a “real return” – above inflation. It has achieved that goal, returning 4pc last year.

Mr Yearsley said: “Looking at a fund against its peer group is useless if you don’t know what a fund is trying to do. If there is a market correction, this fund will shoot up the tables.”

The tax cuts in America are having positive effects on some share prices. Nathan Sweeney, at asset manager Architas, said President Trump’s policy would free up cash for businesses to spend on buying back stock, acquisitions and wage raises.

Schroder US Mid Cap, which invests in medium-sized companies, but had a poor 2017, is likely to profit, said Mr Sweeney. He said medium-sized companies would benefit the most, as they did not have offshore shelters to reduce their tax bills already.