Stick with last year’s star funds

THOSE investors trying to predict the stock market for the year ahead are st r uggling after a rollercoaster ride in 2014. The FTSE 100 almost reached a record high last February before tanking in December and oil prices fell through the floor.

Elections took centre stage in India and Brazil. Japan called a surprise election. Russia closed the year in turmoil while the US was flying.

Among the rabble some funds still managed to bring their investors decent returns. We round up some of the best performers which could also do well in the coming months.

UK EQUITY INCOME

LOYAL investors flocked to Woodford Equity Income when star manager Neil Woodford launched his own fund in June.

In just six months it attracted more than £3bn of investors’ cash.

And it hasn’t disappointed – it has returned 5.5pc over the past six months while the average fund in the sector is down 0.5pc. The fund is a mix of FTSE blue-chips and small early-stage science businesses.

Woodford has an impressive track record, delivering an average of 9.8pc a year over the past 15 years.

GLOBAL

LAST year was a great one for pharmaceutical and healthcare funds, which netted some of the chunkiest returns over the past 12 months.

Schroder Global Healthcare returned 28pc during that period. It invests in big healthcare such as Roche and Merck. The upward trend of healthcare won’t last forever, this is a volatile area to invest, but experts say it could last a little while longer.

UNITED STATES

NORTH America is a tricky place to invest, where it is usually better just to pick an index fund that tracks the stock market.

The top performing fund in the region this year is Fidelity American Special Situations, which has returned 27.5pc.

The top 10 holdings of the fund include some of the usual tech companies such as Cisco Systems and Microsoft – almost 22pc of the fund’s assets are in IT – but there are also some lesser known names such as housebuilders NVR and pharma firm Lilly, which reflect two of the major themes in the region.

EMERGING MARKETS

EMERGING markets have been out of favour of late. These economies have been unpredictable and as the developed world’s currencies grow in strength, theirs do the opposite.

Newton Global Emerging Markets was the top performer over the past 12 months with a return of 14.9pc, although if you had only put your money into the fund last month, you would be down almost 2pc. The biggest proportion of the fund’s money is in India. Biggest investments include Tata Motors and Alibaba.

UK SMALLER COMPANIES

SMALLER companies led the way for a few years after the financial crisis, but the sector won the wooden spoon in 2014 with the average fund down 2.8pc for the year.

One fund that did make some money was Marlborough Special Situations, managed by Giles Hargreave and his team. The fund looks for decent companies that are going through a rough patch, and newly listed firms – currently it invests in JD Sports and The AA. It has returned 2.4pc over the past 12 months.

Axa Framlington UK Smaller Companies is up 4pc.

Experts are divided as to whether smaller companies can do better this year, though.

PROPERTY

THE housing market was a major theme last year and property-obsessed Brits will stay keen in 2015.

These funds were out of favour for a long time after the financial crisis as many investors got trapped in them and lost a lot of money, but interest is starting to show again.

There are two types of property funds – those that buy shares in property companies and those that own actual real estate and make money from increasing property prices and generate income from rents. One of the top performers of the latter is Threadneedle Property, which has returned 17.9pc over the past 12 months.

JAPAN

JAPAN has made a lot of headlines as it undergoes a major economic transformation, pumping billions into its economy and urging companies and consumers to stop saving and start spending to help. Funds have not done superbly though, the average return over the past year is just in the black, at 0.7pc.

But many are tipping the region to produce the goods this year. GLG Core Alpha is down over recent months but is a favourite among experts as it is one of the less volatile Japan funds and it offers currency protection from the weak yen, which should protect investments. It invests in big Japan businesses such as Sony, Nintendo and Honda.

Holly Black is a Money Mail reporter