Sanlam Global Financial, Jupiter Global Financials and Jupiter Financial Opportunities have performed the strongest in the 10 years since the global financial crisis began in 2007, according to research by FE Trustnet.
The widely-accepted start date for the global financial crisis is 9 August 2007, when French bank BNP Paribas suspended subscriptions and redemptions on two funds with heavy exposure to the US sub-prime mortgage market via mortgage-backed securities.
A loss of confidence in the sub-prime market impacted many of the banks and other financial institutions that held the bundled financial instruments, which were subject to massive write-downs.
The ensuing financial crisis brought the banking system to its knees and prompted extraordinary measures by governments around the world – such as ultra-low interest rates and quantitative easing– to restore confidence.
It also had a severe impact on markets, which fell as the crisis grew and banks failed. Indeed, some of the hardest-hit stocks were found in the financial sector.
Below, FE Trustnet looks at the funds focused on financial stocks and examines their performance since the onset of the financial crisis.
Sanlam Global Financial
The $119.8m, three FE Crown-rated Sanlam Global Financial fund was the best performer in the 10 years since the financial crisis, returning 102.33 per cent.
The Irish-domiciled fund which invests in financial stocks from around the world has been managed by South Africa-based Kokkie Kooyman since 2012.
Fund vs sector & benchmark since 2007
Source: FE Analytics
Under Kooyman, the fund aims to identify undervalued financial companies that offer above-average growth potential.
Over five years the fund has generated an 80.82 per cent return to 31 August, although it has underperformed the 120.24 per cent rise in the MSCI World/Financials index and an 88.59 per cent gain for the average IA Global sector fund.
Its largest exposure is to US financial stocks, which represent 31 per cent of the portfolio, followed by Eastern Europe (20 per cent).
More than half the portfolio is currently invested in bank stocks, while generic financial services make up a further 30 per cent of the fund.
Kooyman noted in its most recent factsheet: “The annualised return in US dollars for the past 10 years places the fund third in its global category and in the top quartile of all South African funds over that period - a period which includes the 2008 US housing and financial crisis and the European sovereign debt crisis.
“The fund’s annualised return in US dollars was 3.1 per cent for this period, while the MSCI World Financial index returned 0.7 per cent and the MSCI World index 4 per cent.”
He added: “Based on our experience of the past 30 years, the probability is high that next few years could see a golden period for financials.
“The investment philosophy, as highlighted in the track record, means that the probability is high that the fund will generate good returns over the next 10 years.”
It has an ongoing charges figure (OCF) of 1.6 per cent, it also carries a performance fee of 20 per cent for outperformance of the MSCI World Financial index benchmark.
Jupiter Global Financials & Jupiter Financial Opportunities
Another top performer in the 10 years since the financial crisis is the Jupiter Global Financials fund, which has risen by 100.54 per cent.
The four crown-rated, €68.9m fund has been solely managed by FE Alpha Manager Guy de Blonay since 2015 following the retirement of investment veteran Robert Mumby. Previously de Blonay had been deputy manager alongside Mumby after rejoining the firm in 2009.
Fund vs sector & benchmark since 2007
Source: FE Analytics
Unlike the Sanlam fund, de Blonay’s fund favours Europe more heavily, with Europe and UK stocks representing combined 67.4 per cent of the portfolio.
The portfolio also favours banks, which represent 73.8 per cent of the portfolio, with top holdings including Citigroup, Bank of America and Banco Comercial Portugues and Unicredit.
Its sister fund, Jupiter Financial Opportunities, also rose by 95.77 per cent. The £507.1m fund has a similar fund objective and is also managed by de Blonay.
The main difference between the two funds is that while Global Financials may use financial derivatives to gain greater exposure to the sector the Financial Opportunities fund does not.
The Global Financials fund has an OCF of 0.95 per cent, while Financial Opportunities carries a 0.99 per cent OCF.
Fidelity Global Financial Services
The final fund in our study is Fidelity Global Financials Services. The €1.1bn, five crown-rated fund is managed by FE Alpha Manager Sotiris Boutsis and returned 89.33 per cent in the decade since the financial crisis.
The fund aims to provide long-term capital growth, with at least 70 per cent of the portfolio invested in shares of international companies providing financial services to consumers and the industry.
Fund vs sector since 2007
Source: FE Analytics
Its largest sector allocation is to US stocks, which represent 40.8 per cent. Europe ex-UK represents a further 17.5 per cent of the fund, while emerging market stocks make up 16.5 per cent.
Its top three largest positions include JP Morgan Chase, Citigroup and Bank of America, although Wells Fargo and Morgan Stanley can also be found among the top 10 stocks.
Under Boutsis, the fund has returned 122.63 per cent compared with a gain of 109.23 per cent for the average IA Global sector fund. The fund has an OCF of 0.8 per cent.