Best performing UK funds in first quarter

Best performing UK funds in first quarter

A £122m equity fund run by Aberdeen Standard Investments outperformed hundreds of other UK funds to be the best performer in the first quarter of 2019.

Data from FE shows the Aberdeen Standard Investments UK Opportunities fund returned 15.51 per cent in the three months to the end of March 2019, ranking it number one from 232 funds in the IA UK All Companies sector in that time period.

The IA UK All Companies sector was up 9 per cent during the period.

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The fund is managed by Abbie Glennie. It was the second best performer in the 2017 calendar year, but in the 2018 calendar year lost 17 per cent, putting it among the worst performers at the time.

Ms Glennie has a background investing in UK smaller companies, and this is reflected in the fund, which has pillars of the FTSE 250 among its largest holdings, including Fevertree and JD Sports.

Companies lower down the market cap tend to be more volatile than large caps because there is less liquidity in that part of the market and fewer tracker funds to buy shares looking at that market.

This means they tend to do badly in bad markets, such as the 2018 market, but better in good markets, such as in 2017.

The next best performing fund in the IA UK All Companies sector was Mirabaud UK Equity High Alpha. This is a £16m fund run by Jeremy Hewlett.

The fund returned 15.16 per cent in the first three months of the year, though has underperformed relative to the sector average over five years.

Funds with 'High Alpha' in the name tend to have a relatively small number of investments, so that each investment forms a large part of the overall portfolio.

The largest investment in this fund is Taylor Wimpey, which accounts for 8.8 per cent of the fund, while another housebuilder, Redrow, is also among the top ten investments.

Technology shares also feature heavily, with Micro Focus and Worldpay among the top ten.

The best performing UK Equity Income fund of the first quarter of 2019 was the £579m Unicorn UK Income fund, which returned 13.45 per cent, making it the top ranked from 103 funds in the sector.

The fund is managed by Fraser Mackersie and Simon Moon.

Unusually for a UK equity income fund, there are no FTSE 100 company shares among the top ten holdings, with the fund managers having a background as smaller company investors. Mr Moon currently also runs the Unicorn Smaller Companies fund.

The largest holding is BBA Aviation, which has a market cap of £2.65bn.

The fund lost money in 2018 but was among the best performers in the sector in 2017.

In contrast, the next best performer in the IA UK Equity Income sector is a far more traditional income mandate, in terms of its exposure to larger companies.

The Legal and General UK Equity Income fund, a £288m mandate run by Stephen Message, returned 13.05 per cent in the quarter.