ii Super 60 review: Q1 2021
Find out how interactive investor’s list of rated funds performed in the first three months of the year.
20th April 2021 11:15
by Teodor Dilov from interactive investor
Find out how interactive investor’s list of rated funds performed in the first three months of the year.
ii Super 60 fund selections
Following a turbulent 2020 in which markets went through both shocks and recovery, the first quarter of 2021 continued to deliver opportunities for asset classes that have been overlooked for some time.
The appetite for undervalued assets increased due to prospects for stronger economic recovery and improving corporate earnings. Value investment strategies outperformed growth in major regions across both developed and emerging markets, with cyclical and economically sensitive sectors leading the rally.
The revival of UK equities, and especially its income segment, was best utilised by three out of the five top performing strategies over the period. Diverse Income Trust (LSE:DIVI) topped the table, delivering a near-15% return in Q1, where R&M UK Recovery Fund and Henderson Smaller Companies Trust (LSE:HSL) returned 13% and 11% respectively. The top five is completed by Artemis SmartGARP Global Equity, which employs a unique value investment approach and returned over 13%, and Fidelity China Special Situations Trust (LSE:FCSS), a consistent performer that returned around 10% for the period.
Top five ii Super 60 funds in Q1 2021
| Performance | ||||
|---|---|---|---|---|
| Investment | Q1 (%) | 1 year | 3 Years | 5 Years |
| Diverse Income Trust | 14.6 | 69.9 | 7.3 | 7.7 |
| Artemis SmartGARP Global Equity | 13 | 44.2 | 9.8 | 12.4 |
| ES R&M UK Recovery | 12.7 | 64.1 | 6.7 | 11.5 |
| Henderson Smaller Companies Trust | 11.3 | 73.9 | 14.3 | 17.1 |
| Fidelity China Special Situations Trust | 9.8 | 97.2 | 22.5 | 27.1 |
Source: Morningstar Total returns in sterling
Moving to the bottom five performing strategies so far this year (see below), there is a clear pattern that strong growth style bias had the biggest impact on our Japanese picks. Baillie Gifford Shin Nippon Trust (LSE:BGS) struggled most, delivering a negative return of -11%, where Legg Mason Japan Equity and Lindsell Train Japanese Equity returned around -9% each for the period.
Residential property continued to struggle as its battles the global pandemic, and despite optimism around society getting “back to normal” in the short to medium-term. The fundamental question around the need for residential properties remains. As a result, BMO Commercial Property Trust (LSE:BCPT) declined by approximately 10% in the first quarter. Man GLG Continental European Growth completes the table of underperformers on the back of its strong focus on companies that demonstrate high potential growth.
Bottom five ii Super 60 funds in Q1 2021
| Performance | ||||
|---|---|---|---|---|
| Investment | Q1 (%) | 1 year | 3 Years | 5 Years |
| Baillie Gifford Shin Nippon Trust | -10.9 | 68.8 | 8.1 | 18.5 |
| BMO Commercial Property Trust | -10.2 | -1.7 | -17 | -7.5 |
| Legg Mason IF Japan Equity | -8.8 | 47.6 | 9 | 15.8 |
| Lindsell Train Japanese Equity | -8.7 | -0.5 | 1.5 | 11.1 |
| Man GLG Continental European Growth | -6.5 | 29.2 | 10.2 | 13 |
Source: Morningstar Total returns in sterling
Overall, every rated fund delivered performance in-line with our expectations and, due to the diverse range of options on an asset class and investment style level, long-term returns have not been skewed towards a specific market segment.
In Q1, 63% of the rated active funds ranked in the first and second quartile in their peer group, with 47% outperforming their target benchmark. Over five years, numbers look very strong – 77% of the active managers ranked first or second quartile and 68% generated excess returns.
Most-traded funds on the ii platform in Q1 2021
| Most-bought | Most-sold |
|---|---|
| Scottish Mortgage | Scottish Mortgage |
| Alliance Trust | Fundsmith Equity |
| Fundsmith Equity | iShares Global Clean Energy ETF |
| City of London | Baillie Gifford American |
| iShares Global Clean Energy ETF | Edinburgh Worldwide |
Changes to the ii Super 60 list (under review/developments)
- Following the announcement that Martin Cholwill, the manager of Royal London UK Equity Income will be retiring, the strategy has been put under formal review.
- Scottish Mortgage Investment Trust (LSE:SMT) was also been placed under formal review after the announcement that its lead manager James Anderson will be retiring next year.
Super 60 videos
- ASI Global Smaller Companies fund: Three smaller company tech names with great potential
- ASI Global Smaller Companies fund: Five of my favourite smaller company shares
- Terry Smith on Warren Buffett and how to find good companies
- Terry Smith: three shares I bought and why
- Terry Smith talks fund size and running Fundsmith from Mauritius
- Revealed: Terry Smith’s succession plan for Fundsmith
- Terry Smith: my view on tech shares, and why it's not too late to buy
- Terry Smith: your questions answered
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.