It’s been a year since the FTSE 100 reached its historic peak of 7,122. As soon as the stock market broke the 7,000 marker, bullish experts started placing their bets for when it would make 7,500 or even 8,000.
Instead, what followed was an incredibly torrid 12 months for the index. A crash in China, a commodity rout and ongoing uncertainty around the EU referendum soon saw the market tumble from its heady highs.
By August it had plummeted more than 1,000 points to 5,898. If you had invested £10,000 in the FTSE 100 at its peak, you would have had just £8,281 left by August 24.
If you had hung on until February 11, you would have had just £7,774.
And if you had clung on until yesterday, you would have about £9,000. Of course, investing at the top of the market is, as everyone knows, a terrible idea. So what if you had put your faith in an expert fund manager instead?
The top-performing fund since the FTSE’s peak is MFM Techinvest Special Situations. It has returned 28.4 per cent since April 27 last year, turning £10,000 into £12,840.
If you had invested the same amount in Sarasin EquiSar UK Thematic Opportunities on the same day, you would have £8,350 left – a loss of 16.5 per cent.
According to data from investors Wealth Club, just 89 of 429 funds managed to provide a positive return since the top of the market. That means 340 lost savers’ cash.
So what has been the driving force behind the top performers? They are all focused on smaller companies.
Ben Yearsley, director at Wealth Club, says: ‘Banks and commodities firms aren’t as prevalent in this space. If you add to that some quality stock-picking from a good manager, you have a recipe for outperformance.’
Investing in smaller companies can be incredibly risky as their share prices tend to swing more wildly, making for a rocky ride. And when big companies are doing well, smaller ones tend to suffer. But when the conditions are right, they can deliver stellar performances.
Darren Freemantle, co-manager of the MFM Techinvest Special Situations fund, likes technology firms – around 25 per cent of the fund is in them. One of the strongest-performing companies in the portfolio has been Datalex, which provides online software for airlines.
Freemantle says: ‘Airlines don’t actually make much money on their ticket sales so this software helps them drive other revenue streams. For example, when you pay more to pick your seat, to get priority boarding or for additional baggage.’
The top-performing fund since the FTSE’s peak is MFM Techinvest Special Situations. It has returned 28.4 per cent since April 27 last year, turning £10,000 into £12,840.
If you had invested the same amount in Sarasin EquiSar UK Thematic Opportunities on the same day, you would have £8,350 left – a loss of 16.5 per cent.
According to data from investors Wealth Club, just 89 of 429 funds managed to provide a positive return since the top of the market. That means 340 lost savers’ cash.
So what has been the driving force behind the top performers? They are all focused on smaller companies.
Ben Yearsley, director at Wealth Club, says: ‘Banks and commodities firms aren’t as prevalent in this space. If you add to that some quality stock-picking from a good manager, you have a recipe for outperformance.’
Investing in smaller companies can be incredibly risky as their share prices tend to swing more wildly, making for a rocky ride. And when big companies are doing well, smaller ones tend to suffer. But when the conditions are right, they can deliver stellar performances.
Darren Freemantle, co-manager of the MFM Techinvest Special Situations fund, likes technology firms – around 25 per cent of the fund is in them. One of the strongest-performing companies in the portfolio has been Datalex, which provides online software for airlines.
Freemantle says: ‘Airlines don’t actually make much money on their ticket sales so this software helps them drive other revenue streams. For example, when you pay more to pick your seat, to get priority boarding or for additional baggage.’
SOURCE: Holly Black – ThisIsMoney.co.uk
