View more on these topics

Julian Gibbs

There are times when tracker funds outperform the average UK equity fund but these times are becoming more rare because 42.6 per cent of the All Share index is accounted for its 10 biggest shares and Government regulations mean it is now more difficult for bigger companies to outperform mid-cap and smaller companies.

Isis has produced figures showing that 83 per cent of index funds performed below average in the UK all companies sectors over one year, 71 per cent over three years and 84 per cent over five years. Over longer periods, smaller companies and equity income funds generally outperform UK tracker funds, at present by substantial margins.

Over 10 years, the average UK all companies fund rose by 64 per cent, UK equity income sector by 91 per cent and UK smaller companies by 94 per cent.

Isis quite rightly points out that the real challenge for fund managers is to avoid quasi-trackers which stick closely to the constituents of the indices but charge more.

I believe that those who wish to invest a large proportion of their assets in the UK stockmarket should spread their risk among around 10 UK funds, some investing in smaller companies, some in income shares and some in a mixture of bigger, mid-cap and smaller shares.

The trusts I like best at present are Framlington UK select opportunities, Fidelity special situations, Rathbone special situations, Insight UK dynamic, Framlington equity income, First State British smaller companies, Liontrust first income, BWD microcap, Isis stewardship income and Jupiter undervalued assets. I would expect this portfolio to outperform the FTSE 100 and FTSE All Share indices by a substantial margin in the foreseeable future providing the fund managers remain the same.

Recommended

Barclays banks on combination deal

Barclays is developing a proposition for customers approaching retirement that will combine the bank&#39s products with offers from third parties. It is looking into offering equity release, long-term care, investment planning and tax planning either through third parties or by itself. The project is in the early stages but Barclays says it could include a […]

Commission culture exacerbated endowment crisis

Labour MP John McFall has blamed the financial services industry&#39s commission culture for exacerbating the endowment crisis and has called for a “more positive engagement” from the industry in tackling the problems created by mortgage endowment shortfalls. The Treasury select committee chairman has made the call following the publication of the committee&#39s report on restoring […]

Berry and Sesame slam BBB scheme

The retired founding director of Berry Birch & Noble Financial Services is concerned that Berkeley Berry Birch&#39s decision to dump the firm&#39s liabilities on the Financial Services Compensation Scheme will tarnish his reputation. BBN founder Derek Berry is joined by network giant Sesame in criticism of the FSA for approving the transfer of 150 advisers […]

CTF is complaint waiting to happen

Ever since the child trust fund was announced, I have been trying to work out how my business can afford to take any profitable interest in this new product and Government benefit. I now conclude that, irrespective of the lack of any real prospect of sufficient remuneration to make it worthwhile, this is a future […]

Tech IPOs: The outlook in 2017

Ali Unwin, CTO & Fund Manager, Neptune 2016 was a weak year for technology IPOs – only 13 US venture-backed tech IPOs hit the market, in spite of fairly high public market valuations and investor appetite. Will 2017 be different, asks Neptune CTO & Fund manager Ali Unwin. Click here for article Important Information Investment risks Neptune […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com