ii Super 60 performance review: Q1 2024

The key factors that influenced the returns of funds on the Super 60 list during Q1 2024 were allocations to the IT and communications services sectors, US equities and exposure to Japan.

Given the above, it is no surprise that the top five performers on the list include two US equity funds, Artemis US Smaller Companies (+16.1%) and Jupiter Merian North American Equity (+11.6%). Artemis US Smaller Companies is managed by Cormac Weldon, who is head of the US team and has managed this strategy since launch in October 2014. The strategy tends to have more of a growth-style bias, but the team do also consider value names where they see compelling upside potential. The resultant portfolio comprises 50 to 70 stocks and tends to have more of a mid-cap bias than an outright small-cap bias. The fund outperformed peers over the quarter through strong stock selection.

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Jupiter Merian North American Equity also outperformed peers and the mainstream index (MSCI North America) through positive stock selection. The fund invests across the market-cap scale using a quantitative approach that draws on five distinct factors, including a market-dynamics component that considers momentum trends, short-term signals and dynamic valuation. This enables the model to shift between value and quality to reflect changing market conditions.

The best performer over the quarter was GQG Partners Global Equity(+20.1%). The fund is managed by Rajiv Jain, who established GQG Partners in 2016 after a long and successful career at Vontobel Asset Management where he managed both global and emerging market equity strategies. The team has a growth-oriented outlook, but in seeking to achieve this they adopt a flexible, medium-term investment approach. The portfolio typically comprises 40 to 50 names and the manager is not afraid to back his conviction. Significant positions in IT names such as NVIDIA Corp (NASDAQ:NVDA) and ARM Holdings ADR (NASDAQ:ARM), as well as Meta Platforms (NASDAQ:META), have driven returns over the quarter.

Man GLG Japan CoreAlpha produced a return of 13.9% over the quarter. Jeff Atherton took over as lead manager in January 2021 following the retirement of the fund’s long-standing manager Stephen Harker. Atherton is well versed in the fund’s investment philosophy and process having worked with Harker on this team since 2011 and previously at TCW Group from 2001. The team adopts a distinct value and contrarian bottom-up investment approach that is driven by a belief in mean reversion. There have been some refinements to the investment process under Atherton, who gives more prominence to catalysts and to some quality metrics which are essentially risk controls against value traps, but the contrarian-value nature remains. The fund has benefited from the strength of the Japanese equity market but has also outperformed peers and the mainstream index (Topix), with the value style providing a tailwind.

The final fund in the top five performers is Balanced Commercial Property Ord (LSE:BCPT)(+14.3%). This trust provides exposure to prime UK commercial property with a bias towards central London and the South East, and has a lower allocation than some peers to the industrial sector. The net asset value (NAV) return was just over 1% but the narrowing of the discount resulted in the higher share price return. It should be noted that the discount remains significant at close to 30% due to the uncertainty around commercial property prices.

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All the bottom performers on the Super 60 are investment trusts which, to various degrees, have experienced a widening of their discounts due to negative investor sentiment.

Baillie Gifford Shin Nippon Ord (LSE:BGS) showed the weakest returns, with -2.4% NAV performance exacerbated by a widening discount and resulting in a share price return of -8.3%. Despite the large-cap part of the Japanese market performing well, weakness was seen in small-cap growth stocks and this Baillie Gifford fund has a strong growth bias. The small-cap, growth style and element of gearing mean that the trust is regarded as a higher-risk product. Investors should expect it to show significant variability in share price performance depending on market conditions which is often heightened by movements in the discount.

With a share price return of -5.9% the next fund on the list is Henderson Smaller Companies Ord (LSE:HSL). The flat NAV return is close to the Numis Smaller Companies Ex Investment Companies index return and highlights that the weakness in returns here is due to the investment universe and the movement in the discount. Thus, reflecting uncertainty over the future growth prospects of domestic UK companies.

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TR Property Ord (LSE:TRY) showed a share price return of -5.1%, which was only marginally worse than the NAV return. This is a portfolio of primarily pan-European property equities, with just a small allocation to UK physical property. NAV returns over the quarter were similar to the FTSE EPRA Nareit Developed Europe Index, and therefore reflected the weakness of the commercial property market in Europe. 

After a weak 2023, Fidelity China Special Situations (LSE:FCSS)(-5%) continued to struggle in Q1 2024. China was one of the weakest equity markets as growth continued to slow and global political and economic conditions hampered sentiment. The returns of this trust reflected the small and mid-cap bias of the fund and, given the gearing which is typically around 20%, performance has been in line with expectations.

The final fund on the underperformers’ list is Utilico Emerging Markets Ord (LSE:UEM) with a negative return of 2.5%. This trust is managed by Charles Gillings, who has over 30 years investment experience. Although its primary aim is to deliver long-term capital growth, it also provides a quarterly income and has shown a much higher dividend yield (3.9%) than the market over time. It is largely made up of companies found in the utilities, transport infrastructure and communications sectors and, therefore, differs significantly from the average global emerging markets fund.

Top five Super 60 funds in Q1 2024

Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/03/2024.

Bottom five Super 60 funds in Q1 2024

Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/03/2024.

Top five Super 60 funds for a five-year period

Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/03/2024.

Bottom five Super 60 funds for a five-year period

Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/03/2024.

Most-bought Super 60 funds in Q1 2024

Most-sold Super 60 funds in Q1 2024

Changes to the Super 60 list (under review/developments)

There have been no further changes in Q1 to the lists since the S60 annual review.

Super 60 videos in Q1

None in Q1. Visit our YouTube channel to watch Insider Interviews with Super 60 fund managers.