Sparkling performance of funds may whet appetite for greater risk
We’ve enlisted the services of MoneyMate to identify the top Irish domestic funds over the past 12 months
If you’re fed up with earning returns of not much more than 2 per cent in a savings account and are ready to take a chance and plunge back into riskier assets, it might be time to invest in a fund. But which are the better options?
Bearing in mind that “past performance is no guarantee of future performance” we’ve enlisted the services of MoneyMate to identify the top Irish domestic funds over the past 12 months.
It’s one of the strongest markets in Europe over the past year, but the ever-decreasing number of stocks listed on the Irish Stock Exchange means that the days of actively managed funds focused on the Irish market may be numbered.
The Canada Life/Setanta Irish equity fund, for example, which is managed by local investment group Setanta (now a part of Canada Life/Great-West Lifeco), has had the best performance over the past 12 months, with its “fundamental value approach”. This saw the fund return almost 60 per cent in that period. Its top holding is CPL Resources, which accounts for 13 per cent of the fund, followed by DCC (12.9 per cent) and Total Produce (12.0 per cent).
However, according to fund manager and equity analyst David Pastor, this strategy of identifying smaller companies is set to come to an end, as Setanta has decided to move the fund to a passive approach.
The change has come about for a number of reasons, the main one being the lack of demand for an Irish equity fund in the current environment.
“It’s difficult to get a pensions broker to allocate to Irish equities. There is no money coming in to the fund, and it hasn’t been coming in for years,” says Pastor.
Another factor is the lack of investment targets, with the Irish market continuing to diminish in size.
“The pool has shrunk significantly over the last few years, with a number of important names leaving, some others going bust and others not investable according to our risk management framework,” says Pastor, adding, “it’s difficult to deploy our skills in a universe which is much smaller”.
Apart from Setanta’s fund, other notable performers include the Focus Irish equity fund (+47.5 per cent) from Davy and the Ulster Bank Secure Iseq fund (+46.9 per cent). Actively managed funds are showing their worth in this category, with index tracking funds, such as Irish Life’s Indexed Ireland fund lagging behind, albeit with a still chunky return of 32.2 per cent.
Indeed given the Irish market’s performance over the past year or so, there are no real losers in this category, but the fund that takes the dubious honour of posting the lowest returns is the Standard Life Prosperity Irish Equity fund, which has returned a significant 21.7 per cent over the past 12 months.
Winner: VAM Funds US Micro Cap Growth
Annual growth: 44.3 per cent
Loser: Zurich Life 5 Star 5 Americas
Annual growth: +11.99 per cent
With the US stock market having jumped off its lows in recent years, all the funds in this category are in positive territory. But which is the best? The winner in this category is a US Micro Cap Growth fund from US boutique manager Driehaus Capital Management.