15 years on from Lehman’s: the funds and investment trusts that top the charts

The 15-year anniversary of the collapse of Lehman Brothers, which sent shockwaves through global stock markets, recently passed.

Prior to the largest bankruptcy in US history came the credit crunch. This put paid to over-borrowed banks such as Northern Rock. Then came the full-blown banking crisis in which Lehman’s and other major institutions were forced into takeovers or simply went bust.

The collapse of Lehman Brothers on 15 September 2008 sent stock markets, which had been highly volatile, into free fall. Between Lehman’s collapse and March 2009, the FTSE 100 slipped from around 5,000 points to 3,500.

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As we now know, March 2009 marked the trough. And while the past 15 years has been far from plain sailing, investors who held their nerve and resisted the urge to panic-sell have seen their patience rewarded.

Since Lehman’s collapse, in total return terms (which factors in dividends) the FTSE 100 index has gained 162%. This equates to 6.6% in terms of annualised returns, which is above the historic long-term average gains of around 5% a year for UK shares.

Investors who had the foresight or luck to invest in the biggest winners of the past 15 years will have enjoyed much higher returns.

QuotedData, the investment trust analyst, ran the numbers to identify the top-performing investment trusts over the period. It looked at investment performance – net asset value (NAV) – returns.

The top 10 performers on this measure are shown in the table below, with Allianz Technology Trust (LSE:ATT), Polar Capital Technology (LSE:PCT) and Lindsell Train (LSE:LTI), occupying the top three positions.

David Johnson, analyst at QuotedData, says that the performance of technology shares has been the key theme during the 15-year period. As well as producing stellar performance “the sector was also given huge leeway to take risks thanks to the rock-bottom discount rates investors used when assessing an investment’s validity, a consequence of ultra-low interest rates”.

He adds: “This also explains why the broader ‘growth’ sector, such as Scottish Mortgage (LSE:SMT), did well, as well as the more highly valued ‘quality’ sector, like Lindsell Train or Mid Wynd International (LSE:MWY), which could justify their valuations due to the low cost of capital.”

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Another winning trend has been exposure to private equity. Among the top 10 performers are Oakley Capital Investments (LSE:OCI), HarbourVest Global Private Equity (LSE:HVPE), and HgCapital Trust (LSE:HGT).

At the moment, the sector is deeply out of favour due to the rising interest rate environment causing investors to take less risk. In addition, there’s scepticism over whether the valuations attached to private companies have moved sufficiently to reflect higher rates.

Johnson says that “this long-term outperformance gives some credibility to the commonly espoused notion that holding on to good businesses for a long period of time is key to generating capital growth”.

Source: QuotedData and Morningstar. Source: FE Fundinfo. Data from 15 September 2008 to 15 September 2023. 

In terms of the returns that investors would have made – the share price total return figure – the numbers tell the same story.

The top 10 performers on this measure are Polar Capital Technology, Allianz Technology, Lindsell Train, Scottish Mortgage, JPMorgan American, Oakley Capital, Worldwide Healthcare, HgCapital, BlackRock Throgmorton Trust (LSE:THRG), and 3i Group (LSE:III).

Johnson says that in some instances private equity trusts' share price returns are marginally ahead of their NAV returns. He says this “reflects the fact that private equites saw their discounts widen during the global financial crisis and have narrowed slightly today”.

For open-ended funds, the same trends play out and technology funds dominate the winners’ list. A passive fund leads the list, with annualised returns of 19.3%.

Source: FE Fundinfo. Data from 15 September 2008 to 15 September 2023.