Moneywise Fund Awards 2008

Global stockmarkets have had a torrid time this year. Recessionary fears and the toxic combination of sub-prime debts, frozen money markets, broken banks and government bailouts have brought out the doomsayers, and stockmarkets worldwide have been in freefall.

Over the past 12 months the UK’s FTSE 100 plummeted by 35.2%. A greater fall of 36.4% was felt by the leading US stockmarket the S&P 500, while Japan’s Nikkei lost a staggering 44.7%.

But while it may be tempting to follow the herd and cash in your investments, keeping your nerve when the going gets tough is the key to any successful investment strategy.

Of course, it’s also vital that you select the right investments for you in the first place, and this is where the annual Moneywise fund awards come in. With so many funds to choose from, our awards have singled out those managers who have delivered long-term, consistent performance, without giving their investors too many sleepless nights.

So, as we wave goodbye to a year that many investors would like to forget, we reveal the winning funds that have managed to set themselves ahead of the pack and kept their cool in hysterical markets.


Funds that invest primarily in the UK are the lifeblood of many investors’ portfolios. While they may choose to explore some foreign markets, the majority of us invest most of our money closer to home.

The overwhelming majority of UK funds are found in the UK All Companies sector and, over five years, the average fund has returned around 49%. However, UK funds have found it all but impossible to hide from the current market turmoil and, over the last year, the typical All Companies fund is down by 24%.

More than ever this year we were looking to reward funds that had not only performed well during the good times, but also managed to minimise losses during the bad. It’s this ability that makes the winner in our UK All Companies award stand out.

Paul Spencer, manager of the Rensburg UK Mid-Cap Growth Trust, invests 80% of his portfolio in mid-cap companies listed on the FTSE 250. Despite losing 19.6% this year, the fund has returned nearly 118% over the past five.

“Although Spencer has only been managing the fund for two years, he has been very defensive and the fund has held up much better than some of the much bigger names in the sector,” says Gavin Haynes, managing director of Whitechurch Securities. “The fund is also positioned well for the future, with exposure to stocks that are likely to enter the FTSE 250 within the next 18 months.”

Alan Smith, managing director of Capital Asset Management, favours our runner-up, the JPM UK Dynamic fund, which has returned 96.14% over five years. “The past year has been a stockpicker’s market; John Baker’s wide mandate and focused investment approach should comfort investors.”

But if you want to take a little more risk for a chance of a greater return, the UK Smaller Companies sector ticks those boxes. However, because much less is known about smaller companies, an even greater emphasis is placed on the manager’s stockpicking skills.

Our winner, the Old Mutual Select Smaller Companies fund, reclaims the crown it won in 2006. Manager Daniel Nickols’ strategy is to identify parts of the economy he thinks will do well and select stocks accordingly – such as support services and healthcare. “Nickols has a very strong track record and has been pretty bearish of late, positioning his fund accordingly,” says Haynes.

Although smaller companies funds have suffered heavy losses this year, with the average fund sliding by 42%, over five years the fund has managed to return nearly 133%, and 178% over seven – a true leader in its field.
Coming a close second is the BlackRock UK Smaller Companies fund, run by Richard Plackett since 2002, which has produced a 124.43% return since 2003. Smith puts this performance down to the strength of the management team. “The fund has really stood out in testing times,” he says.

When markets started to lose money so spectacularly this year there was a shift in appetite from capital appreciation towards more solid income streams. Ben Yearsley, investment manager at Hargreaves Lansdown, believes that the equity income sector will continue to profit from this changing outlook, especially as interest rates are expected to fall further.

“Equity income funds have a heavy bias towards larger, well-established companies that aim to deliver higher income streams to their investors. But the credit crunch has made this particularly hard, as so many of the funds have had exposure to financials,” he says. Yet one stands out from its peers, taking the award for the second year running.

The Invesco Perpetual High Income fund, managed by Neil Woodford, has returned 104% over the past five years – some 20% more than the rest of the pack.

Woodford is perhaps one of the best-performing managers in the UK today, and deserves recognition for taking a brave and unpopular stance. Haynes says: “For a number of years, Woodford had no direct exposure to banks, which he believed did not constitute value. It was a position that has served him well.”

Woodford also manages the very similar Invesco Income fund, which takes highly commended for the second year in a row. Meera Patel, senior analyst at Hargreaves Lansdown, says: “Anyone after a safe pair of hands would do well to choose either of these strong funds.”

If minimising risk and maximising yields is the priority for investors in the current climate, corporate bonds could be the place to look. Darius McDermott, managing director of Chelsea Financial Services, says: “A falling interest-rate environment will obviously be positive for fixed interest. Investors facing lower returns from savings accounts may wish to diversify into bonds as they’ll be paid handsomely for the extra risk.”

Our outright winner, for the fourth consecutive year, is the Invesco Perpetual Corporate Bond fund. With one of the strongest and longest-serving corporate bond teams in the UK, consisting of Paul Causer and Paul Read, the fund is a sector stalwart.

Returning over 18% over five years, the relative safety of the fund explains why it’s taken over £2.6 billion from its investors. “It has become the staple diet of the independent financial adviser community for many years now, as it’s a fund for all seasons,” says Alan Smith.

The 17.53% yield over five years of the highly commended M&G Corporate Bond should also be a safe bet, with manager Richard Woolnough having almost no exposure to the riskier tier-one bank bonds.


Since the credit crunch began, the European fund landscape has suffered in much the same way as the UK. European equities have taken a battering this year, with 35% being wiped off the average fund. Yet strong and diverse European companies can still be found, a task that this year’s winner has performed to great effect.

The Jupiter European Special Situations fund, which came a close second last year, is by far and away the top performing fund in terms of consistency, preservation and return. Run by Cedric de Fonclare, who took the reins from Leon Howard-Spink in 2005, the fund has returned an impressive 196% over three years. A £1,000 investment five years ago would be worth £2,333.60 today, a rise of 133.6% compared with the 108.34% from the average fund in the sector.

“De Fonclare is a great manager with a great track record,” says Ben Yearsley. “Close to 80% of his portfolio is in large caps, firms that have the potential to rise out the flames by providing stable profits, such as healthcare, oil and gas.”

The majority of the fund is invested in undervalued French, German and Swiss companies, while deliberately avoiding holdings based in Eastern Europe. Jupiter also takes highly commended with the Jupiter European fund. Patel says: “Both funds are part of the same team, but are managed very differently. The European fund’s key focus is on quality large-to-mid-cap companies that have ridden out the storm over the past year.”


The eyes of the world shifted eastwards this year with the Olympic Games, and it seems that China continues to blaze a trail for investors seeking out strong returns. Such investors would do well to look at this year’s gold medal winner – the Gartmore China Opportunities fund, which focuses directly on China.

Managed by Charlie Awdry, the fund concentrates on stocks with strong franchises and sustainable earnings growth. Although it has had a difficult year, it has blown the competition away over three, five and seven years – with 99%, 168% and 245% respectively. Only global emerging markets has beaten this sector in terms of average fund performance.

“Awdry has only been managing the fund for the past two years and has done an excellent job,” says Ben Yearsley. “Although his racy management style may not have helped performance in recent months, it’s in line with the Chinese Index.” Yearsley points out that Awdry has added holdings in more cash-generative sectors, such as utilities and telecoms, which should set him up for the future.

Taking silver this year is the Invesco Perpetual Hong Kong & China fund. “There was a time when this fund struggled,” says Meera Patel. “But it’s got a good three-year track record and is worth a look.”

However, Alan Smith stresses the sector is not for risk-averse investors, which explains the lower Lipper preservation ratings. “China’s a long-term growth story. People there won’t stop wanting to improve their lives and there are solid signs for future growth, but as demand for its exports falter, especially in the US, the country can’t avoid an immediate slowdown.”


The volatility witnessed by the collapse of banks and government bailouts across the globe prompted the International Monetary Fund to revise its forecast for global growth to just 3% next year, a level the IMF has called the dividing line between a global recession and expansion. But that doesn’t mean it’s not worth having exposure to the global economy, only that picking the right fund is even more important.

Our winner, for three years in a row, is the M&G Global Basics fund. Returning over 169% over five years, the fund invests in companies that provide the building blocks of the global economy, such as food production, commodities and energy. “The fund’s exceptional performance can be explained purely in terms of David French’s excellent stockpicking skills,” says Gavin Haynes. “It has avoided financials altogether, and has benefited over the past 12 months from the boom in commodities.”

Although the fund has taken a knock of 35% in the three months to November, Smith strongly believes the fund is well positioned to deliver steady returns in the future, despite frosty market conditions. “It’s all about the timescale. Underlying fundamentals suggest the fund will be able to roam into other areas of opportunities and profit from global growth,” he says.

Coming a close second this year is the Rathbone Global Opportunities fund. “James Thomson has a fairly focused portfolio, investing in undiscovered global growth companies. As global funds go, this is a strong performer,” says Haynes.


Smith’s warning can also be applied to other emerging markets, where stellar returns can also be found, providing you don’t mind a bumpy ride.

“As a consequence of the credit crunch, wild swings in both stocks and commodities have hit Western markets hard, but the wrecking ball has been even more destructive in emerging markets,” says McDermott. “They are being hammered – particularly Asian stocks.”

This year’s winner was a difficult one to call, but the award goes to the fund that has not only managed to outperform in the long term, but also scored slightly higher for capital preservation. James Donald’s Lazard Emerging Markets fund scoops the top prize in the sector this year.

Haynes believes the fund is a worthy winner. “While some emerging market managers were not afraid to take risks and make hay while the sun shines, Donald has had the right approach,” he says. “His belief that valuations were stressed has been proven right, and his portfolio has benefited as a consequence.”

The fund’s core holding is in financials with little exposure to toxic debts, and not only has it returned 195.8% over the past five years, it is rated as a ‘Leader’ for consistency by Lipper – no mean feat in such an incredibly volatile sector.

Taking highly commended is the Aberdeen Emerging Markets fund, last year’s winner. “I’ve been a big supporter of the fund’s manager, Hugh Young,” says Haynes. “He heads up a great team, and although many people criticised his cautious stance, his value-driven philosophy has been proven right by today’s turbulent markets.”


Most analysts believe that if the global economy is to bounce back, the US needs to recover first. The home of the credit crunch has been rocked by events throughout the year, with the average North American fund plummeting by 28.2%. Current investors in the area hope a new president will lead to renewed optimism, but for those with the courage to invest across the pond, picking a fund that has proven its worth in the past is crucial.

Once again, our winner is the Martin Currie North American fund, which has managed to weather the storm and outperform its peers.

“The efficiency within the US market makes it incredibly hard for active fund managers to consistently beat the index,” says Alan Smith. “But Tom Walker is one of the few managers that do. His more boutique style and unique stockpicking skills has ranked him beyond his peers.”

A £1,000 investment in the fund five years ago, for example, would be worth £1,459.90 today.

The BlackRock US Opportunities fund, which has returned 35.37% over five years, takes second place. “This fund is unconstrained in its approach and very well diversified,” says Smith. “That can only be a good thing for investors hoping to reduce risk in these testing times.”


In stark contrast to emerging markets – in terms of investment growth – is the specialist sector, with the average fund returning just 27.7% over five years. Although the sector is hard to ignore, due to the excellent returns investors could achieve, making like-for-like comparisons is tricky.

This is because it’s something of a ‘cupboard under the stairs’ for funds that don’t fit in the more mainstream sectors – often because they have a very narrow remit. It contains funds ranging from biotech and commercial property, to natural resources and Latin America.

However, it’s a fund in the latter category that takes the award for the second consecutive year. The Scottish Widows Latin American fund, managed by Jeffrey Casson since 2006, has returned a staggering 338.95% over five years. “Scottish Widows has really excelled in this area, with a phenomenal performance over three and five years,” says Meera Patel.

Patel is also a big fan of the Invesco Perpetual Latin American fund, which has returned 323.7% over five years. “While Latin America is an extremely volatile sector, the beauty of Invesco’s fund is that although it focuses on blue chip companies, it does not shy away from finding true gems in smaller companies,” she explains.

Such strong returns have come mainly on the back of the recent commodities boom, which has been driven in the main by demand from China and India. However, although both of these funds have large holdings in mining and oil, Gavin Haynes believes investors should be wary of them over the next year.

“Latin America is driven by Brazil, which is rich in natural resources. It has had a fantastic time over the past few years, but given the global climate it’s questionable whether it’s still an area with which to invest,” he warns.


UK All Companies

Winner: Rensburg UK Mid-Cap Growth
Fund management group: Rensburg Fund Management
Fund manager: Paul Spencer
Contact: 0845 606 1402
Minimum investment: £500
Initial charge: 4.50%
Total expense ratio: 1.58%
Return on £1,000 over five years: £2,117.54 (117.54%)
Lipper preservation rating (5= best, 1 = worst): 4
Lipper consistency rating: Leader*

COMMENDED: BlackRock UK Dynamic, M&G Recovery, Liontrust First Growth

UK Corporate Bonds

Winner: Invesco Perpetual Corp. Bond
Fund management group: Invesco Perpetual
Fund manager:Paul Causer/Paul Read
Contact: 0800 085 8677
Minimum investment: £500
Initial charge: 5%
Total expense ratio: 1.19%
Return on £1,000 over five years: £1,180.52 (18.52%)
Lipper preservation rating (5= best, 1 = worst): 2
Lipper consistency rating: Leader

COMMENDED: Rensburg Corporate Bond Trust, Thesis Optima Bond, Standard Life AAA Income

UK Equity Income

Winner: Invesco Perpetual High Income
Fund management group: Invesco Perpetual
Fund manager: Neil Woodford
Contact: 0800 085 8677
Minimum investment: £500
Initial charge: 5%
Total expense ratio: 1.69%
Return on £1,000 over five years: £2,040.50 (104.05%)
Lipper preservation rating (5= best, 1 = worst): Leader*
Lipper consistency rating: Leader*

HIGHLY COMMENDED: Invesco Perpetual Income
COMMENDED: St James’s Place UK High Income, Artemis Income, Standard Life UK Equity High Income

UK Smaller Companies

Winner: Old Mutual UK Select Smaller Cos
Fund management group: Old Mutual Fund Managers
Fund manager: Daniel Nickols
Contact: 0808 100 8808
Minimum investment: £1,000
Initial charge: 4%
Total expense ratio: 1.93%
Return on £1,000 over five years: £2,329.30 (132.30%)
Lipper preservation rating (5= best, 1 = worst): 3
Lipper consistency rating: Leader*

HIGHLY COMMENDED: BlackRock UK Smaller Companies
COMMENDED: Standard Life UK Smaller Companies, Invesco Perpetual UK Smaller Companies, Investec UK

Smaller Companies Europe Excluding UK

Winner: Jupiter European Special Situations
Fund management group: Jupiter Investment Management
Fund manager: Cedric de Fonclare
Contact: 0202 7314 7500
Minimum investment: £500
Initial charge: 5.25%
Total expense ratio: 1.81%
Return on £1,000 over five years: £2,333.60 (133.36%)
Lipper preservation rating (5= best, 1 = worst): Leader*
Lipper consistency rating: leader*

HIGHLY COMMENDED: Jupiter European
COMMENDED: Standard Life European Equity, Norwich Sustainable Future European Growth, New Star European Value

Asia Pacific (ex Japan)

Winner: Gartmore China Opportunities
Fund management group: Gartmore Investment Ltd
Fund manager: Charlie Awdry
Contact: 0800 289 336
Minimum investment: £1,000
Initial charge: 5%
Total expense ratio: 1.70%
Return on £1,000 over five years: £2,678.60 (167.86%)
Lipper preservation rating (5= best, 1 = worst): 1
Lipper consistency rating: Leader*

HIGHLY COMMENDED: Invesco Perpetual Hong Kong & China
COMMENDED: First State Asia Pacific, Martin Currie Asia Pacific, Threadneedle Asia

Global Growth

Winner: M&G Global Basics
Fund management group: M&G Limited
Fund manager: Graham French
Contact: 0800 390 390
Minimum investment: £500
Initial charge: 4%
Total expense ratio: 1.64%
Return on £1,000 over five years: £2,169.24 (169.24%)
Lipper preservation rating (5= best, 1 = worst): 4
Lipper consistency rating: Leader*

HIGHLY COMMENDED: Rathbone Global Opportunities
COMMENDED: Jupiter Global Managed, Ecclesiastical Amity International, M&G Global Leaders

Global Emerging Markets

Winner: Lazard Emerging Markets
Fund management group: Lazard Emerging Markets
Fund manager: James Donald
Contact: 0870 606 6408
Minimum investment: £2,000
Initial charge: 3.75%
Total expense ratio: 1.69%
Return on £1,000 over five years: £2,195.80 (195.8%)
Lipper preservation rating (5= best, 1 = worst): 3
Lipper consistency rating: Leader*

HIGHLY COMMENDED: Aberdeen Emerging Markets
COMMENDED: AXA Framlington Emerging Markets, Baillie Gifford Emerging Markets, JPM Emerging Markets

North America

Winner: Martin Currie North American
Fund management group: Martin Currie
Fund manager: Tom Walker
Contact: 0131 229 5252
Minimum investment: £1,000
Initial charge: 5%
Total expense ratio: 2.18%
Return on £1,000 over five years: £1,459.90 (45.99%)
Lipper preservation rating (5= best, 1 = worst): 3
Lipper consistency rating: Leader*

HIGHLY COMMENDED: BlackRock US Opportunities
COMMENDED: Smith & Williamson North American Trust, Baillie Gifford American, Scottish Mutual North American


Winner: Scottish Widows Latin American
Fund management group: Scottish Widows
Fund manager: Jeffrey Casson
Contact: 0845 716 6777
Minimum investment: £1,000
Initial charge: 5%
Total expense ratio: 1.76%
Return on £1,000 over five years: £4,389.50 (338.95%)
Lipper preservation rating (5= best, 1 = worst): 3
Lipper consistency rating: 3

HIGHLY COMMENDED: Invesco Perpetual Latin American
COMMENDED: Threadneedle Latin American, JPM New Europe, JPM Natural Resources

* Leader = top-ranking fund


We selected the winning funds firstly by aggregating their performance over the last three, five and seven years (bid-to-bid, net income reinvested). All funds must be available to the public and require no more than £3,000 minimum investment. These were then filtered to remove those that were inconsistent, volatile and less able to minimise losses in comparison with their peer group to give us our winners.

Consistency was rated using the Lipper Leaders formula, which recognises strong performance and low volatility. The ability to minimise losses in a downturn was measured using the Lipper Leaders preservation ratings.

The final factor for consideration were fund charges to give us an idea of value for money.