ii Super 60 performance review: Q2 2024
Discover how interactive investor’s rated funds performed in the three months to the end of June.
11th July 2024 12:41
The key factors that influenced the returns of funds on the Super 60 list during Q2 were allocations to Asian equities, Japan and small-caps.
Henderson Smaller Companies (LSE:HSL) posted the largest return over the quarter, reflecting the strength of UK smaller companies (in sterling terms) and the improved sentiment towards the asset class. This led to a share price return of 11.3% with a significant portion of that due to the discount narrowing.
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The manager of the trust has a focus on identifying quality growth companies and holding them over the long term. Individual names are assessed using the team’s 4Ms process that covers, Model (competitive advantages and SWOT analysis); Management (quality of leadership); Money (company financials); and Momentum (potential for persistent positive earnings surprises), an approach that has proved to be successful over time.
The second fund in the top five performers is also a UK smaller companies fund, WS Amati UK Listed Smaller Companies. As an open-ended vehicle, performance reflects the net asset value (NAV) and the fund showed a strong positive return of 7.7%. The fund invests across AIM and FTSE 250 stocks, but tends to have a slightly smaller market-cap profile than its category peers and this helped it produce slight outperformance over the quarter.
The final UK equity fund in the top five is Fidelity Special Values (LSE:FSV), which is another investment trust that benefited from improved sentiment towards UK equities. The trust produced a share price return of 5.8%, an uplift on the NAV return of 4.5%.
The manager invests across the market-cap range including small-caps where he has significant experience. He also benefits from the extensive research resources of the group. The process looks to identify unloved companies that have the potential to recover based on factors such as a business model/corporate change or industry cycles and this value-oriented approach has seen success over time.
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The European Smaller Companies Trust PLC (LSE:ESCT) returned 6.2% in share price terms over the quarter, with the narrowing of its discount improving the NAV return of 3.3%. Manager Ollie Beckett has been at the Janus Henderson group for more than 17 years and is experienced in this area of the market. There is a focus on identifying stocks that are mis-priced relative to their cash generation, with company meetings being key to the assessment.
Returns significantly outpaced the MSCI Europe ex UK Small Cap Index with particular strength from names such as SUESS MicroTec SE (XETRA:SMHN), Optima Bank and Grenergy Renovables SA (XMAD:GRE), all of which were up more than 35%.
The remaining fund on the outperformers’ list, Fidelity Asia, has benefited from both India and China producing strong returns at the same time, buoying regional performance. The fund saw gains of 7.5% from its portfolio of well-managed industry leaders that are positioned to benefit from changes in industry dynamics, and trade on attractive valuations.
Within the bottom five performers on the Super 60 list are three funds investing in Japan.
TheHSBC Japan Index fund produced a negative return of 4.1%. It tracks the FTSE Japan Index which fell over the quarter following a period of good relative returns. The strength of sterling had a significant impact on returns to UK investors, while the consumer discretionary and IT sectors pulled index returns down, with Toyota Motor Corp ADR (NYSE:TM) being a significant stock level detractor.
Man GLG Japan CoreAlpha showed worse performance than the above passive fund with a negative 6.4% return. The team responsible for this fund adopts a distinct value and contrarian bottom-up investment approach that is driven by a belief in mean reversion.
Over the quarter, this large-cap-value style was in favour in Japan although the MSCI Japan Large Value Index still produced a negative return in sterling terms of 2.9%. The further weakness seen from this fund reflected stock picking in industrials and financials, however we retain conviction in the long-term prospects for the strategy.
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Baillie Gifford Shin Nippon (LSE:BGS) is the other Japan fund on the list with a negative share price return of 4.6%. However, this return was flattered by the narrowing discount, with the NAV return being -10.2%.
This Baillie Gifford fund has a strong growth bias as its investment approach follows the more extreme end of the house process and focuses on identifying companies with high earnings and sales growth at the bottom of the market-cap scale.
The style of the product and an element of gearing explain most of the performance seen over the quarter, rather than any particular issues with stock selection.
The other two funds on the underperformers’ list both reflect the weakness in returns from US small-cap stocks, which significantly underperformed large-caps. Against this backdrop Artemis US Smaller Companies saw a decline of 5%. The fund is managed by Cormac Weldon who is head of the US team and has managed this strategy since launch in October 2014.
The fund generally shows a growth-style bias and has more investments in mid-caps than many peers. Although the fund was marginally behind the peer group average over the quarter it is ahead over both three and five years.
Premier Miton US Opportunities is a multi-cap portfolio that is fairly concentrated and has a focus on higher-quality, sustainable stocks. The fund is all-cap with a significant exposure to mid- and small-caps which hurt returns over the quarter.
Attribution versus the mainstream S&P 500 index also highlights the underweight to the IT sector and the overweight and stock selection to the industrials sector, as negatives. However, versus flex-cap peers the fund continues to show strong medium-term returns.
Top five Super 60 funds in Q2 2024
| Group/Investment | 3 months (%) | 1 year | 3 years | 5 years |
| Henderson Smaller Companies Ord (LSE:HSL) | 11.31 | 20.29 | -24.97 | 13.94 |
| WS Amati UK Listed Smaller Coms B Acc | 7.69 | 7.71 | -27.48 | 3.96 |
| Fidelity Asia W Acc | 7.48 | 10.49 | -15.14 | 15.68 |
| The European Smaller Companies Trust PLC (LSE:ESCT) | 6.15 | 19.53 | 4.48 | 82.79 |
| Fidelity Special Values Ord (LSE:FSV) | 5.79 | 20.11 | 13.47 | 32.49 |
Source: Morningstar - Total Return for open-ended/Market Return for closed-ended - (GBP) to 30/06/2024.
Bottom five Super 60 funds in Q2 2024
| Group/Investment | 3 months (%) | 1 year | 3 years | 5 years |
| Premier Miton US Opportunities B Acc | -6.64 | 11.08 | 18.89 | 69.68 |
| Man GLG Japan CoreAlpha Profl Acc C | -6.38 | 14.39 | 43.59 | 48.41 |
| Artemis US Smaller Companies I Acc GBP | -4.98 | 23.15 | 4.55 | 53.87 |
| Baillie Gifford Shin Nippon Ord (LSE:BGS) | -4.62 | -18.04 | -49.82 | -36.66 |
| HSBC Japan Index C Acc | -4.09 | 12.32 | 15.34 | 36.87 |
Source: Morningstar - Total Return for open-ended/Market Return for closed-ended- (GBP) to 30/06/2024.
Top five Super 60 funds for a five-year period
| Group/Investment | 3 months (%) | 1 year | 3 years | 5 years |
| Jupiter Merian North Amer Eq I GBP Acc | 2.28 | 24.78 | 39.75 | 92.66 |
| Vanguard US Equity Idx £ Acc | 3.10 | 23.58 | 36.11 | 91.24 |
| The European Smaller Companies Trust PLC (LSE:ESCT) | 6.15 | 19.53 | 4.48 | 82.79 |
| iShares Core MSCI World ETF USD Acc GBP (LSE:SWDA) | 2.62 | 20.96 | 33.68 | 76.30 |
| Scottish Mortgage Ord (LSE:SMT) | -0.81 | 33.37 | -32.59 | 70.51 |
Source: Morningstar - Total Return for open-ended/Market Return for closed-ended - (GBP) to 30/06/2024.
Bottom five Super 60 funds for a five-year period
| Group/Investment | 3 months (%) | 1 year | 3 years | 5 years |
| Baillie Gifford Shin Nippon Ord (LSE:BGS) | -4.62 | -18.04 | -49.82 | -36.66 |
| Vanguard UK Govt Bd Idx £ Dist | -1.22 | 4.41 | -26.51 | -22.93 |
| TR Property Ord (LSE:TRY) | -1.82 | 22.48 | -20.03 | -7.04 |
| M&G Global Macro Bond GBP I Acc | -2.10 | -0.74 | -8.01 | -5.75 |
| Vanguard Glb Bd Idx £ H Acc | -0.20 | 3.15 | -9.51 | -5.06 |
Source: Morningstar - Total Return for open-ended/Market Return for closed-ended - (GBP) to 30/06/2024.
Most-bought Super 60 funds in Q2 2024
| Vanguard LifeStrategy 80% Equity |
| Scottish Mortgage Ord (LSE:SMT) |
| Fundsmith Equity I Acc |
| iShares Core MSCI World ETF USD Acc GBP (LSE:SWDA) |
| Vanguard LifeStrategy 60% Equity |
Most-sold Super 60 funds in Q2 2024
| Scottish Mortgage Ord (LSE:SMT) |
| Fundsmith Equity I Acc |
| City of London Ord (LSE:CTY) |
| Vanguard LifeStrategy 80% Equity |
| iShares Physical Gold ETC GBP (LSE:SGLN) |
Changes to the Super 60 list (under review/developments)
Removal of Balanced Commercial Property Trust from the Super 60.
Super 60 videos in Q2
Fidelity European
Europe’s answer to the Magnificent Seven – at cheaper prices
The company metric that beats the market in Europe
Guinness Asian Equity Income
Why UK investors should go overseas for income
Why this is the best long-term investment opportunity
Bankers
Why my fund is overweight UK and underweight US shares
Why this dividend hero is a one-stop shop for global equities
The Super 60 investments list is selected and managed by our independent research partner Morningstar and reviewed by our in-house investment experts to help narrow down the wide choice of available investment products. We believe it represents a set of high-quality choices, across different asset classes, regions, and investment types.
However, you should note that the selection of Super 60 investments list is not a ‘personal recommendation’. This means we have not assessed your investment knowledge, your financial situation (including your ability to bear losses), your investment objectives, your risk tolerance, or your sustainability preferences.
You should ensure that any investment decisions you make are suitable for your personal circumstances, and if you are unsure about the suitability of a particular investment or think you need a personal recommendation, you should speak to a suitably qualified financial adviser.
The past performance of an investment is not a reliable indicator of future results, and ii does not guarantee or predict the future performance of the Super 60 investments list as a whole or the constituent investments.
Risk Warning(s)
The value of your investments may go down as well as up. You may not get back all the money that you invest.
Investing in emerging markets involves different risks from developed markets, in many cases the risks are greater.
The value of international investments is affected by currency fluctuations which might reduce their value in sterling.
Disclosure(s)
All funds listed are the Accumulation version of the fund, where available, where any income generated within the fund is reinvested automatically. Income versions of these funds may also be available for investors looking for income generated to be paid directly into their account.
Annual performance can be found on the factsheet of each fund, trust or ETF. Simply click on the asset’s name and then the performance tab.
Any changes to the Super 60 investments list and the rationale behind those decisions will be communicated through the Quarterly Investment Review.
Details of all Super 60 recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Members of ii staff may have holdings in one or more Super 60 investments, which could create a conflict of interest. Any member of staff involved in the development of research about any financial instrument in which they have an interest are required to disclose such interest to ii. We will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, staff involved in the production of the Super 60 investments list are subject to a personal account dealing restriction. This prevents them from placing a transaction in the specified instrument(s) for five working days before and after an investment is included or amended and made public within the Super 60 investments list. This is to avoid personal interests conflicting with the interests of investors in the Super 60 investments.