Equities  

ITs weather storms better than most

ITs weather storms better than most

The past 12 months have seen a number of unexpected political events that have caused intermittent stockmarket wobbles around the world. 

But in a period that has seen the UK vote to leave the EU and the US elect outsider Donald Trump as president, equity market indices have overall performed better than many might have expected. 

The S&P 500 index gained a sizeable 31.9 per cent in sterling terms for the 12 months to May 18 2017, data from FE shows. 

Meanwhile, the MSCI Emerging Markets index climbed 43.3 per cent in the same period, with the FTSE All-Share gaining 24.8 per cent in sterling terms. 

The equity categories in the IA 100 Club have also lived up to expectations, with the North American Equity group delivering an average 12-month return of 34.1 per cent, ahead of the S&P 500 index. 

Even the Global Emerging Markets category, which has seen a boost in recent months but struggled in the second half of 2016, has seen its members deliver an average return of 39.1 per cent in the period, only slightly behind the MSCI Emerging Markets benchmark. 

The nine equity groups of the 100 Club are broken down into both regions and styles, comprising Global Equity, Global Emerging Markets, North American Equity, Japanese Equity, Asia Pacific Equity, European Equity, UK Equity, UK Equity Income and UK Smaller Companies. 

Of these nine categories, the combined average performance of the club members outperformed the relevant Investment Association (IA) sector peer group average across five years in every sector. 

In addition, seven categories also outperformed the relevant Association of Investment Companies (AIC) peer group average, apart from European and Japanese equities, where the average investment trust performance was higher in the 12 months to May 18 2017. 

While there were only seven trusts listed in five equity groups in 2016, with three of these appearing in the UK Equity Income category, in four of these groups it was a closed-ended vehicle that topped the performance rankings over five years. 

In only one group, Asia-Pacific Equity, did an open-ended fund beat an investment trust for the top spot, and in this case it was the winning offering in the category, Veritas Asian, that has continued its strong performance and justified its selection as the best in class. 

The difference between open- and closed-ended performance this year has been less extreme as there were fewer trusts in the categories than in recent years. 

But the figures show that trusts appear to have weathered the geopolitical and macroeconomic storms better than most, with three of the top-five performing vehicles for the five years to May 18, in sterling terms, being closed-ended offerings. 

These all come from different categories – the JPMorgan Mid-Cap trust from UK Equity, the Independent Investment Trust from Global Equity and Invesco Perpetual’s UK Smaller Companies vehicle from UK Smaller Companies. 

The top-performing open-ended fund across five years was Legg Mason IF Japan Equity, returning 308 per cent in sterling terms.