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

The Daily Telegraph - Your Money - - FRONT PAGE -

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.

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