24 Oct 2017
Our Gatekeepers series continues with a review of the UK All Companies sector. View the top ten UK All Companies funds in the second quarter here.
With 225 actively managed funds, the IA UK All Companies sector has been seen as the bellwether for asset allocators looking for broad-based exposure to UK Equities. However, according to the Investment Association, it has been the worst-selling retail sector since 2010 (with the exception of 2013 when sterling corporate bond assumed the mantle).
Fundscape’s Platform Report paints a rosier picture. It gathers actual share-class sales data from the UK’s adviser platforms on a quarterly basis. These figures show that the sector has consistently been in the top five sectors by net sales in every year except for 2016 when it plummeted to the bottom along with Europe ex-UK and Property funds.
However, things have looked up in the first half of 2017. UK All Companies topped the sector ranking with gross sales of over £5bn, and although redemptions dragged net sales back to less than £1.5bn, it was still in third place overall.
Higher redemptions are usually a feature of a nervous market, yet the FTSE All-Share Index returned 5.5%, the FTSE 100 4.7% while the FTSE 250 produced 8.4% over that six-month period. Indeed only three of the 262 funds suffered negative returns, while more than 70% of active funds in the UK All Companies sector were ahead of their respective index benchmarks.
The reality is that as longstanding core investments, UK All Companies funds have a significant volume of mature assets on board, so there will always be a dichotomy between gross and net sales.
As for the stand-out funds, funds from smaller groups such as Slater, Marlborough, Unicorn and Miton are in the top ten, but with no more than a couple of appearances each, having yet to persuade a wider audience of their value (click here to see the table).
Of the larger groups, Old Mutual stands out with nine funds in the sector and dominates the top ten with UK Dynamic Equity (3 appearances), UK Mid Cap (17) and Equity 1 all in the top 10 for funds by three-year alpha.
Of the other most popular funds with gatekeepers in the sector, Franklin UK Mid-Cap (16) outperformed the FTSE 250 index by a full four percentage points, while Lindsell Train UK Equity also showed strong performance returning over 11%.
Of course, not all investors in this sector are looking for active management. The sector is home to 37 tracker funds focused on 5 FTSE UK indices — passive investors might be surprised to learn that 33 of those tracker funds beat their indices too!
To paraphrase Sir Alex Ferguson, “Investments…bloody hell!”
Explore the free and easy-to-use gatekeepers tool here.
Photo by Neil Cooper on Unsplash