The Dublin-domiciled portfolio has picked up an impressive 81.16 per cent since 1 January, well ahead of the average fund in the IMA Global sector, which gained just 20.55 per cent. The fund’s benchmark, the Wilderhill New Energy Global Innovation Index, made 55.56 per cent over this period.
Year-to-date performance of fund vs sector and index
Source: FE Analytics
However, early investors in the energy fund would have had to have waited a long time to see its sector and style come into favour. Guinness Alternative Energy has lost money over the past three calendar years, including an eye-watering 41.45 per cent in the down markets of 2011.
As a result of several difficult years, it is still down nearly 7 per cent since launch. The average fund in the IMA Global sector has gained 27.57 per cent over this period.
Another sector that was battered and bruised but has come back in to favour this year is Japan, with Legg Mason Japan Equity delivering the second-highest return of any IMA fund so far in 2013, at 81.11 per cent. Invesco Perpetual Japanese Smaller Companies was the third best-performing fund.
Investors in the Legg Mason fund would have been biting their nails as the portfolio bled capital in 2006, 2007, 2008 and 2009. In 2006 alone the fund lost more than half its value.
However, investors who stuck with it over the last decade would have made 56.44 per cent, broadly in line with the Tokyo Topix index, but more than 10 percentage points ahead of the IMA Japan sector.
20 best-performing funds in 2013
| Fund | 2013 (%) |
|---|---|
| Guinness Alternative Energy | 81.16 |
| Legg Mason Japan Equity | 81.11 |
| Invesco Perpetual Japanese Smaller Companies | 61.9 |
| AXA Framlington Biotech | 56.09 |
| Legg Mason Capital Management Opportunity | 55.12 |
| FF&P US Small Cap Equity | 52.84 |
| Baillie Gifford Global Discovery | 52.83 |
| Baillie Gifford Japanese Smaller Companies | 51.98 |
| MFM Techinvest Technology | 48.13 |
| Pictet Biotech | 46.96 |
| R&M UK Equity Long Term Recovery | 46.92 |
| Guinness Global Money Managers | 45.46 |
| Polar Capital Healthcare Opportunities | 44.24 |
| R&M UK Equity Smaller Companies | 44.13 |
| Fidelity UK Smaller Companies | 43.27 |
| Unicorn UK Smaller Companies | 43.2 |
| Ignis European Smaller Companies | 42.93 |
| CF Wood Street Microcap Investment | 42.38 |
| Standard Life UK Equity Unconstrained | 41.21 |
| JPM Japan | 40.66 |
Source: FE Analytics
In 2012, the best-performing fund in the IMA universe in terms of total return was Standard Life UK Equity Unconstrained, managed by Ed Legget.
The fund has continued to deliver strong returns so far this year, picking up 41.21 per cent, making it the 19th-best performer in 2013.
However, a number of funds that topped the tables last year have suffered underperformance thus far in 2013.
It is difficult to buy an asset when the news around it is negative and even more difficult to hold on to when it haemorrhages cash, yet the fact that some of this year's leaders were previously in dire straits underlines the importance to investors of holding their nerve.
It is not just the Guinness and Legg Mason funds that have experienced a turnaround this year. The Baillie Gifford Japanese Smaller Companies fund suffered heavy losses in both 2006 and 2007, but has surged ahead 51.98 per cent. The R&M UK Equity Long Term Recovery fund lost nearly 20 per cent in 2011, but is now up 118.4 per cent since launch in July 2008.
And who can forget that FE Alpha Manager Neil Woodford was on the wrong end of the market in the late 1990s?
He had no exposure to the tech sector in the run-up to the dotcom bubble because he felt it was a crash waiting to happen. The manager trailed his peers to the point that rumours he would lose his job surfaced, yet his conviction was proved correct.
As Woodford celebrates more than 25 years on his flagship Invesco Perpetual High Income fund, the core UK equity income portfolio is up more than 1,600 per cent since the start of FE data in December 1989, nearly triple the returns of the IMA UK Equity Income sector.
Performance of fund vs sector since 1989
Source: FE Analytics
Unsurprisingly, a number of UK Smaller Companies funds made the list of the top-20 performers so far this year – the five crown-rated Fidelity UK Smaller Companies fund, managed by FE Alpha Manager Alex Wright and the four crown-rated Unicorn UK Smaller Companies fund, run by FE Alpha Manager John McClure.
Small caps have wildly outperformed the FTSE All Share and FTSE 100 over the last 12 months, picking up 37.23 per cent compared with 22.2 per cent from the All Share and 20.14 per cent from the blue chip FTSE 100 index.
This trend of outperformance is nothing new; however, the rise of small and mid caps has been much more pronounced since mid-2012.
Unfortunately, Wright’s leading Fidelity UK Smaller Companies fund was closed to new money earlier this year, though McClure’s small cap portfolio remains open.
The Unicorn fund requires a minimum initial investment of £2,500 and has ongoing charges of 1.61 per cent.
