Moneywise Fund Awards 2009

After a year of bank bailouts, the US sub-prime crisis and global recession, predictions of market recovery in 2009 were understandably gloomy: results from the Investment Management Association’s (IMA) Great British Investor Report in November 2008 revealed that 39% of respondents expected conditions in the investment market to get worse over the coming six months.

However, by March this year, the markets were showing signs of recovery, and coupled with media speculation about ‘green shoots’, this gave investors the encouragement they needed to turn back to equities. IMA stastistics for the first quarter of 2009 showed net retail sales reaching £4.2 billion, the highest inflow since the first quarter of 2006 (£4.6 billion), and considerably better than the paltry £90 million inflow recorded in the first three months of 2008.

The FTSE 100 has rallied over 40% and the S&P 500 by 50%, and investor confidence is high. However, we cannot expect to see the same dramatic upswings in 2010, as markets around the world remain unstable.

This means it’s more important than ever that you select the right investment for you – and this is where the Moneywise Fund Awards can prove its worth.


In general, most UK investors concentrate on funds that primarily invest in the UK as the main basis of their portfolio. However, with the UK economy hit hard by the recession, UK funds have taken a battering.

UK All Companies

(Fund management group)

Rensburg Fund Management
Fund manager Paul Spencer
Contact 0845 609 0900
Minimum investment £500
Initial charge 4.5%
Total expense ratio 1.55%
Return on £1,000 over five years £1,993.01 (99.3%)
Lipper preservation rating (5=best, 1=worst) 4
Lipper consistency rating Leader*
Highly commended Threadneedle UK Mid 250
Commended Old Mutual UK Select Mid Cap, Standard Life Investments UK Opportunities, Schroder Recovery
*Leader = the top performing fund in the sector (applies to all tables)

An average fund in the All Companies category, which accounts for the majority of UK funds, dropped to -8.58% growth in three years, with the average smaller companies fund at -11.78%, according to Lipper.

We therefore looked for those funds that had managed to perform well in spite of the difficult circumstances, and look like they will continue to do so in the future.

This year’s winner of the UK All Companies category is Rensburg UK Mid-Cap Growth, which also took top prize in 2008, highlighting fund manager Paul Spencer’s excellent track record since taking the helm three years ago.

The fund has posted returns of 20.09% since then and 160.33% over the last seven years, and in both cases was significantly above the sector average.

As its name suggests, the fund invests 80% of its portfolio in the FTSE 250 Index, as does our runner-up, Threadneedle UK Mid 250.

“It’s not surprising that the contenders are dominated by mid-caps,” says Darius McDermott, managing director of Chelsea Financial Services. “In recent years, mid-caps have been the hottest area of the market, and these two managers have taken full advantage.”

Gavin Haynes, managing director of Whitechurch Securities, praises Simon Haines, fund manager of Threadneedle UK Mid 250. “He has outperformed the index comfortably over the past three years and the fund has been one of the best in the very large UK All Companies sector,” he says.

UK Smaller Companies Sector

(Fund management group)
Old Mutual
Fund manager Daniel Nickols
Contact 0808 100 2715
Minimum investment £1,000
Initial charge 4%
Total expense ratio 1.92%
Return on £1,000 over five years £1,910.81 (91.08%)
Lipper preservation rating (5=best, 1=worst) Leader*
Lipper consistency rating Leader*
Highly commended Marlborough Special Situations
Commended Investec UK Smaller Companies, Standard Life Investment UK Smaller Companies, M&G Smaller Companies

If you want to spice up your portfolio but still remain within UK shores, you could consider the UK Smaller Companies sector.

Funds in this category invest at least 80% of their assets in the UK equities of companies that form the bottom 10% by market capitalisation (the market value of a quoted company calculated by multiplying the share price by the number of shares), which means selecting the right stocks is even more important.

Of all the UK sectors, the Smaller Companies has undoubtedly fared the worst, with average negative growth of -11.78% over three years – not a major surprise as smaller companies tend to fare the worst in a downturn. However, with greater risk comes the potential for greater reward and the average smaller companies fund has grown by 81.21% in seven years.

Last year’s winner, Old Mutual UK Select Smaller Companies, once again comes out on top, followed by Marlborough Special Situations. Alan Smith, managing director of Capital Asset Management, attributes the winning fund’s success to its overweighting in oil and gas producers.

“These industries have been the beneficiaries of global reflation and, with the emerging markets recovery, have helped the fund deliver strong comparative returns,” he says.

However, Smith is also impressed by runner-up Marlborough Special Situations: “This fund is one of the most enduring in its sector.”

UK Equity Income

(Fund management group)
Schroders Investment Management
Fund manager Ian Lance & Nick Purves
Contact 0800 718 777
Minimum investment £1,000
Initial charge 5.25%
Total expense ratio 1.66%
Return on £1,000 over five years £1,517 (51.72%)
Lipper preservation rating (5=best, 1=worst) Leader*
Lipper consistency rating Leader*
Highly commended St James’s Place Equity Income
Commended Invesco Perpetual High Income, CF Walker Crips Equity Income, Invesco Perpetual Income

Towards the start of this year, the IMA decided to split the UK Equity Income sector in two. The original Equity Income sector required funds to invest 80% in UK equities and reach 110% of the FTSE 
All-Share yield, but because a number of funds were failing to achieve this, the IMA created a new UK Equity Income and Growth sector as well, which 
only requires 90% yields of the FTSE All-Share.

Because this sector is so new and there are only 17 funds in it, Moneywise has chosen an overall winner for the two categories. Taking top place is the Schroder Income fund, managed by Nick Purves and Ian Lance, which has grown by 56.8% in the last five years and is over double the percentage growth of the average (25.81%) equity income fund.

Our highly commended fund, St James’s Place Equity Income, is also managed by Nick Purves from Schroders. Smith says: “It has benefited from the expertise within a team known for its skills in the equity income arena.”

Corporate Bonds

(Fund management group)

M&G Strategy
Fund manager Richard Woolnough
Contact 0800 072 6144
Minimum investment £500
Initial charge 3%
Total expense ratio 1.17%
Return on £1,000 over five years £1,408.42 (40.84%)
Lipper preservation rating (5=best, 1=worst) Leader*
Lipper consistency rating Leader*
Highly commended CF Canlife Bond
Commended M&G Corporate Bond, Gartmore Corporate Bond, Invesco Perpetual Corporate Bond

Corporate Bonds was undoubtedly one of the standout sectors to invest in this last year. As interest rates on saving accounts plummeted, investors were attracted by the fixed rates that corporate bonds promised.

However, although they were up by 40% this year, McDermott doesn’t think corporate bonds will enjoy the same growth in 2010. “For the last 12 months, they have been screamingly cheap,” he says. “But we can now expect them to return to more typical bond-like levels.”

Ben Yearsley, investment manager at Hargreaves Lansdown, points out that manager Richard Woolnough is in charge of three bond funds for M&G and thinks any one of them could be a top fund. “The Strategic Corporate Bond is the medium-risk fund of the three,” he says.

CF Canlife Bond, the runner–up, suffered badly in 2008, but its long-term performance is impressive.


(Fund management group)
Fund manager Alister Hibbert
Contact 020 7743 3000
Minimum investment £500
Initial charge 5%
Total expense ratio 1.66%
Return on £1,000 over five years £2,184.83 (118.48%)
Lipper preservation rating (5=best, 1=worst) 3
Lipper consistency rating Leader*
Highly commended Neptune European Opportunities
Commended Cazenove European, BlackRock Continental European, Jupiter European Special Situations

Funds investing in Europe fared as badly as the UK in 2008, but the average fund rallied 48% in the last year. However, some of this is lost with currency returns, and the sector is unlikely to see such big gains again this year, so it’s essential to pick a strong fund in this category in order to protect your investment.

The winning fund, BlackRock European Dynamic, has consistently been at the top of the fund tables, posting growth of 28.52%, compared with the average 3.66%, over three years, and an impressive 163.33% growth, against the 84.1% average, for seven years.

“Large positions in financials – and banks in particular – have ensured some very strong returns over the last year as banks began to recover,” says Smith.

McDermott holds Neptune European Opportunities, the runner-up, in equally high regard. “It’s difficult to separate the winner and runner-up in this category,” he says. “Neptune runs a combined top-down/bottom-up approach, while BlackRock Dynamic is a pure boutique bottom-up fund.”


(Fund management group)
First State Investments
Fund manager Martin Lau
Contact 0800 587 4141
Minimum investment £1,000
Initial charge 4%
Total expense ratio 1.83%
Return on £1,000 over five years £2,786.67 (178.67%)
Lipper preservation rating (5=best, 1=worst) 4
Lipper consistency rating Leader*
Highly commended Gartmore China Opportunities
Commended First State Asia Pacific Leaders, Fidelity South East Asia, CF Canlife Far East

Investors looking to rebalance their portfolios with long-term growth options should turn their heads – and cash – east, with Far East funds offering the promise of great returns, provided you remember that the racier regions they invest in also hold considerable risk.

While this looks likely to be a favoured area for the next 12 months, there are many things to consider carefully – the geopolitical issues inevitable in less stable regions, for example, and the effect of currency volatility on your investment’s value.

First State’s Greater China Growth fund, this year’s winner, is described by Yearsley as “a typical First State fund”. He explains: “It has a committed manager, who is looking for long-term winners, strong balance sheets, good cash flow and quality management, and should outperform over the cycle.”

The runner-up fund, Gartmore China Opportunities, was last year’s winner, and has a strong track record. “It’s maybe not as high-octane as other funds in manager Charlie Awdry’s peer group, but it’s a dependable fund in a volatile sector,” says McDermott.


(Fund management group)
Neptune Investment Management
Fund manager Felix Wintle
Contact 0800 587 5051
Minimum investment £1,000
Initial charge 5%
Total expense ratio 1.93%
Return on £1,000 over five years £1,789.32 (78.93%)
Lipper preservation rating (5=best, 1=worst) 4
Lipper consistency rating Leader*
Highly commended Threadneedle American Select
Commended BlackRock US Opportunities, Jupiter North American Income, Newton American GBP

Despite making up 50% of the world index, the US sector is hugely under-owned by UK investors. If you follow the ‘first in, first out’ of the recession argument, choosing funds in this area would make sense, although currency plays a big factor in what you’ll get back.

Whereas a few years back sterling was strong versus the US dollar, this certainly isn’t the case now and most advisers remain pretty neutral about picking North America funds, and certainly don’t think they should dominate a typical investment portfolio.

Managed by Felix Wintle, Neptune US Opportunities takes the crown in this category, achieving growth rates of 90.11% over five years, compared with an average of 13.83%. “The market is notoriously efficient, so a fund has to be very good to seek out a return. Neptune US Opportunities is one of these funds,” says McDermott.

Threadneedle American Select is our runner-up. Smith describes the consistency of this fund as “exceptional”, and praises the quality of the team. “This fund is an obvious pick when allocating assets to the US market,” he adds.


(Fund management group)

Baillie Gifford
Fund manager Richard Sneller and William Sutcliffe
Contact 0800 917 2113
Minimum investment £1,000
Initial charge 5%
Total expense ratio 1.55%
Return on £1,000 over five years: £2,842.44 (184.24%)
Lipper preservation rating (5=best, 1=worst) 2
Lipper consistency rating Leader*
Highly commended First State Global Emerging Mkt Leaders
Commended JPM Emerging Markets, Lazard Emerging markets, First State Global Emerging Markets

Undoubtedly, one of the strongest performing sectors in 2009, emerging markets continues to look an attractive, if risky, prospect for 2010. Compared with developed markets, emerging markets face much less debt and the long-term growth prospects are good, but this has to be counterbalanced by the increased chances of volatility.

Latin America remains the main success story for emerging markets funds. The second largest geographical exposure of this year’s winning fund, Baillie Gifford Emerging Markets, is in Brazil (15.5%). A fifth of the fund is invested in China, another investment hotspot, and it also has significant investment in Korea.

Its five-year growth figures are well above average: 173.32% compared with 132.36% average in the sector. “This is a good solid choice for clients looking for diversified emerging markets exposure,” says Haynes. 

Our highly commended fund, First State’s Emerging Markets Leaders, tends to outperform in difficult markets but lags in strong ones.


(Fund management group)
Ecclesiastical Amity International
Fund manager Rob Hepworth
Contact 0845 777 3322
Minimum investment £200
Initial charge 5%
Total expense ratio 1.76%
Return on £1,000 over five years £1,850.12 (85.01%)
Lipper preservation rating (5=best, 1=worst) Leader*
Lipper consistency rating Leader*
Highly commended M&G Global Basics
Commended Invesco Perpetual Global Smaller Companies, CF Adam Worldwide, First State Global Opportunities

Although the global economy might appear to be on the mend, most experts believe the recovery has a while yet to run, making it harder to achieve return on capital. It’s all the more surprising, then, that this year’s winner is Ecclesiastical Amity International, which has an ethical bias. Yet fund manager Rob Hepworth, who has managed the fund since its 1999 launch, has more than proved his outstanding stockpicking credentials.

“The Ecclesiastical Amity International fund has done the impossible: to bring a screened fund into the mainstream, and not only knock the spots of its rival socially responsible investment funds, but also outperform its non-screened peers over three and five years,” McDermott says.

The fund has grown by 32.06% in the last three years, compared with average negative growth of -0.4% over the same period.

Runner-up M&G Global Basics has won this category for the last four years, proving its consistency. 


(Fund management group)
Capita Financial Managers
Fund manager Timothy Youngman
Contact 0870 607 2555
Minimum investment £1,000
Initial charge 5%
Total expense ratio 1.56%
Return on £1,000 over five years £2,316.85 (131.68%)
Lipper preservation rating (5=best, 1=worst) Leader*
Lipper consistency rating N/A
Highly commended Newton Balanced
Commended Margetts Select Strategy, Neptune Balanced, Jupiter Merlin Balanced Portfolio

These funds invest in a range of assets, with no more than 85% in equities. They are a great choice for pension savers because the asset spread reduces the risk, but comparing funds can be tricky due to the differences in the underlying assets and their variety – from bonds to equities.

In terms of growth, CF Ruffer European is head and shoulders above the rest, growing by 137.57% in five years, compared with the sector average 31.81%. Its fantastic performance is driven by large holdings such as energy and industrials. Its focus on Europe could limit the fund’s performance in the future, but it still comes highly recommended.

“This fund follows an absolute return philosophy and has a record of producing consistent positive returns, even during very difficult years,” says Haynes.

He also likes runner-up fund Newton Balanced: “It has shown strong defensive qualities during difficult times, while providing 
long-term returns.”


To find the winning funds, we first contacted Lipper for the top 20 funds (bid-to-bid, net income reinvested) in each category for the past three, five and seven years. All funds must be available to retail investors and require no more than £3,000 minimum investment.

Performance was then aggregated over these different periods to see the overall top-performing funds. Closed funds and those with poor Lipper ratings were then removed.

Consistency ratings assess a fund’s ability to perform well with relatively low risk, preservation ratings measure how well a fund manages to minimise losses in a downturn, and expense ratings indicate a fund’s value for money, taking in its charges.  

We decided not to include funds in the Specialist sector this year because they are so difficult to compare. In its place is a new award, focused on funds in the Balanced Managed sector.