Number of funds generating top returns plunges in torrid investment environment

The number of funds generating top returns plunged in the fourth quarter during a torrid investment environment.

Only six of the 1108 funds analysed achieved consistent top quartile returns in the fourth quarter of last year, representing 0.54 per cent, down from 19 funds in the previous quarter, according to BMO Global Asset Management.

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The ratio fell below the usual range of two to five per cent, and can be blamed on the “vicious” rotation in markets and asset prices.

The £205m Investec Global Gold fund, run by George Cheveley, was the strongest performer in the quarter, according to BMO analysis of funds in the Investment Association’s 12 sector categories.

Meanwhile, the worst performer was the £43m Allianz UK Mid Cap fund run by Andrew Hall and Matthew Neville.

BMO Global Asset Management investment manager Kelly Prior said: “Our analysis show that the last quarter of 2018 was challenging for active management as the vicious rotation in markets and asset prices created a torrid investment environment.

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“With a massive risk off rush in December, profit taking in the growth darlings was replaced by the need for safety and the perceived security of Government bonds and staple equity sectors.

“With the ECB now firmly stating their withdrawal from supporting the market at a time when the US Federal Reserve is doing the same, natural market forces should come into play, and with that we expect a more fruitful time for active management in 2019.”