A slew of high-profile fund managers could be set to deliver their first loss-making year in half a decade.
Numerous fund managers from houses including Schroders, Aberdeen and Artemis, who have delivered positive returns each calendar year since 2009, look set to post losses for 2014 as share prices have become more closely linked to company fundamentals.
In the previous five years up to and including 2009, share prices generally swung based more on macroeconomic factors, as global threats were the focus of investors’ minds.
Big wholesale switches away from small- and medium-sized businesses towards larger companies have also lead to losses this year.
Data from FE Analytics shows Paul Marriage’s Schroder UK Dynamic Smaller Companies fund is sitting on the poorest calendar-year performance of these funds, having lost 9.3 per cent as of November 25. Narrowly behind it is Julie Dean’s former fund, Schroder UK Opportunities, now run by Matt Hudson, followed by Unicorn’s UK Growth fund, which has so far this year lost 7.4 per cent, according to the data.
Three funds in the list are focused on UK smaller companies, while the Unicorn fund is skewed towards smaller firms.
Schroders said its two funds had underperformed this year “largely due to stock-specific factors”, adding it had been a “particularly challenging year” for all UK equity active managers.
Fraser Mackersie, who runs the Unicorn UK Growth fund, said more than 60 per cent of the vehicle was in Aim stocks and smaller firms that had “struggled this year” and were now “down 15 per cent year to date”.
Artemis’s Mark Niznik and Charles Stanley’s Chris Evans said stock-specific issues had also hit their portfolios.
Mr Niznik said the value of an unquoted stock, Hurricane Energy, had to be cut before it listed on the stockmarket for the first time. He said this cost him 1 per cent in performance, but even if it had been included, he would be only half way up the league table, which he was “disappointed about”.
Mr Evans admitted some stock-specific calls had gone “horribly wrong”, stating he had held on to Sainsbury’s for too long and his “token gesture” to the banking sector, Standard Chartered, had not performed as he had hoped.
He added because he was a “conviction investor” he had stuck with companies such as manufacturer Senior, which had not performed as expected.
Paul Stevens, co-manager of the CFIC Octopus UK Micro Cap Growth fund, acknowledged it had been a “challenging year for small-cap investors”, adding he did not think the strength of the firms he held had been reflected in their share prices.
Two bond funds also feature with the Aberdeen Absolute Return Bond fund down 1.7 per cent year to date, and the Goldman Sachs Global Fixed Income Portfolio fund down 0.5 per cent.
Aberdeen manager James Carver said fund performance had been affected by the “massive rally in government bonds and relatively stable credit markets”, which were “contrary to what we envisaged”.
Cartesian’s UK Enhanced Alpha fund also features in the list, however manager Jeremy Hall said looking at data just a couple of days beyond the end data point of November 25, the fund had now returned to positive numbers year to date.
Goldman Sachs and DSM Capital Partners declined to comment.
