Dimensional International Value, Invesco Global Equity (UK) and Schroder ISF Global Energy are among the global equity strategies that have turned their performance around in 2021, according to data from FE Analytics.
The three years prior to 2021 were difficult years for value, energy and financials as the outperformance of growth stocks dominated the global equity sector.
But as investors started to digest record-breaking levels of inflation in 2021, growth has started to lag the performance of value, energy and financials.
Below, Trustnet looks at all 480 funds in the Investment Association’s global sector and determined which delivered bottom quartile performance for the calendar years 2018, 2019 and 2020, but made a comeback to deliver sector-topping performance in 2021.
Source: FE Analytics
The highest performing funds in the list were the Schroder ISF Global Energy fund and the State Street Global Advisors SPDR MSCI World Energy ICITS ETF, which tracks the MSCI World Energy 35/20 Capped Index.
The actively managed Schroder energy fund beat the energy index tracker by delivering 48.8% in 2021, compared to 41.8%.
It takes a balanced approach to investing between independent exploration and production companies versus integrated oil companies and oil services providers.
This allowed the fund to benefit from its relative overweight positioning in oilfield service companies like H&P, Halliburton and Schlumberger last year.
By contrast, the MSCI World Energy 35/20 Capped Index has less than 5% invested in energy equipment & services stocks, and the remaining 95% invested in the likes of large oil & gas firms Exxon Mobil and Chevron.
Further down the list the Denker Global Financial fund was another strategy that made a big comeback in 2021, with a return of 29% over the year.
Managed by Kokkie Kooyman, it actively invests in the financial sector, focusing on companies with a good track record of growing their business.
It has benefitted from its investments in well-known financial giants such as Citigroup, JP Morgan and Legal & General, however it has also invested in more specialist financial firms such as reinsurance house Renaissance Re and Indian mortgage firm LIC Housing Finance.
It has almost half of its entire portfolio invested in banks, with the remaining in in financial services, nonlife insurance and credit services.
Investors started to price in higher interest rates last year, benefiting financial firms as it should lead to higher profit margins on their loans.
Elsewhere on the list, two Invesco-managed global equity funds featured. First up, was the Invesco Global Equity fund, managed by Andrew Hall.
This strategy has benefited from its roughly 25% exposure to information technology through its positions in companies such as Microsoft, Alphabet and Amazon, which performed well in 2021 on the back of strong earnings momentum after the pandemic.
However, Hall has also benefitted from his 17% exposure to the financial sector, which also performed well last year. Here the fund owns JP Morgan and MasterCard among others.
The other Invesco fund that made the list was the Invesco Global Ex UK Core Equity Index, run by Alexander Uhlmann and Georg Elsäesser – who use a systematic, factor-driven investment strategy.
Although it is actively managed, the fund aims to mimic the broad risk characteristics of the MSCI World ex UK Index.
The managers invest the portfolio around four concepts: earnings expectations, market sentiment, management & quality and value. The fund is highly diversified, investing in roughly 260 stocks that the managers deem attractively valued, with good earnings and price momentum.
Finally, the last fund that featured in the list was the Dimensional International Value fund, managed by the systematic investment firm Dimensional Fund Advisors.
Similar to the previous strategy, this fund is a highly diversified all-cap value fund that is overweight smaller, value and more profitable companies, with more than 500 holdings.
A spokesperson from Dimensional said: “Research has shown that securities offering higher expected returns share certain characteristics, which we call dimensions.
“In equities these are size, value and profitability (or quality). We structure broadly diversified portfolios that emphasise these dimensions, while addressing the trade-offs that arise when executing portfolios.”