According to firm’s Multi-Manager Q3 2023 Fund Watch survey, of the 1,323 funds tracked across 12 sectors, 3.9% delivered consistent top quartile returns on a rolling basis over three years, up from 2.1% in the period. The historical average since the survey began in 2008 was between 2-4%.
In the third quarter of last year, the number of funds delivering consistent, top quartile returns over three years reached an all-time low, with only 0.3% achieving this feat.
The survey for that period found that the IA Japan sector saw the highest proportion of consistent top quartile funds, while the IA Strategic Bond had none.
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In the latest edition of the study, the total number of funds providing above average returns in each of the last three years also improved. Out of 1323, 262 funds delivered above average performance on a rolling basis the past three years, compared to 165 last quarter.
Again, IA Japan was the top reporting sector, with 31% funds securing above average returns (18 out of 52 funds). Meanwhile, the IA UK Equity Income sector had the least number of funds achieving this, at only 13.5% (ten out of 74).
The top performing fund throughout Q3 was the Guinness Global Energy fund, which has a large cap value bias and uses a concentrated list of stocks to gain exposure to equities in exploration and production of oil, gas and other energy sources.
The fund has returned 186% over the last three years, compared to the IA Commodity/Natural Resources sector average of 60.9%, according to data from FE fundinfo. In the last three months, it has returned 20.4%.
Meanwhile, the worst performing fund analysed by Columbia Threadneedle was the Luxembourg Selection Fund – Active Solar fund, the first long-only mutual fund focused purely on the worldwide energy sector.
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The fund has lost 26.8% over the last three years, compared to a gain of 32.2% for the FO Commodity and Energy sector, according to data from FE fundinfo. In the last three months alone, it was down 25.9%.
The IA India/Indian Subcontinent sector saw the best performance, returning 6.5%, according to the study, while the IA EUR High Yield Bond sector was second with 3.5% average returns.
At the other end, the IA Infrastructure sector was the worst performer, losing 5.4% over the quarter, while the IA UK Index Linked Gilt sector is down 4.5%.
There was large divergence between the various UK categories, with the IA UK Smaller Companies sector average falling 2%, while the UK Equity Income sector gained 2.3%. Similarly, the IA UK Index Linked Gilt sector average fell 4.5%, while the UK £ Corporate Bond equivalent rose 2.1%.
Kelly Prior, investment manager in the multi-manager team at Columbia Threadneedle Investments, said: “Having hit the all-time low point in consistency in this survey’s history a year ago, this quarter brought with it a continuation of the upward trend that started from that point.
“As is usually the case, this has been driven by a certain cohort, namely value funds in equity and short duration in bonds. However, the landscape is everchanging and the types of fund and manager that can succeed will need flex to reflect the opportunity set.”
She said: “What we see today is a stark contrast to three years ago, when the key characteristics for consistent funds in Q3 2020 were growth and long duration.”
