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The cost of caution

The £11m Barmac The Castleston growth fund has been named the worst-performing fund in the latest Chelsea Financial Services RedZone survey.

The survey, previously called the Relegation Zone, lists the worst-performing funds on a three-year cumulative basis.

The Barmac The Castleston growth fund underperformed its sector average by 35.7 per cent. It fell by 12.53 per cent, compared with a sector average growth of 23.2 per cent.

Second and third on the list are the £21m Legal & General UK special situations and £27m Malborough Far East growth funds.

L&G UK special situations fund underperformed returned 10.4 per cent compared with a sector average of 41.6 per cent.

The SVM global opportunities fund returned 6.5 per cent compared with a sector average of 27.9 per cent.

Barmac Asset Management chief investment officer Andy McCarthy says: “Our performance during the period of 2007 to early 2009 was outstanding but since then we have remained overly cautious and our bearish protection strategy has not paid off as markets have rallied on the back of quantitative easing.”

F&C’s £13m blue fund is ranked eighth in the list, returning 1.8 per cent compared with a sector average of 23.2 per cent.

F&C head of corporate affairs Jason Hollands says the fund has a very cautious remit. He says: “The fund is designed to generate cash plus 1 per cent as capital growth. Unsurprisingly in the current market and with record low interest rates, this is not going to look exciting against funds with different remits.”

The £24m SVM global opportunities fund is ranked ninth in Chelsea’s list and the fund manager Donald Robertson says the poor performance has been due to his cautious stance.

He says: “We have been inherently cautious over the last 18 months and that has not changed. The portfolio has been slow to keep up with sharply rising markets, especially developed markets where we are underweight.”

Robertson adds that he expects the fund’s exposure to emerging markets to benefit the portfolio if confidence in the market returns.

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