Super 60 rated funds list reshuffle after annual review

interactive investor’s review results in six new additions and two removals.

interactive investor, the UK’s second-largest direct-to-consumer investment platform, has reshuffled its ‘Super 60’ rated list, with six new additions and two removals following its annual review.

Super 60, launched two years ago, includes a range of different asset classes, styles and approaches to suit different investor needs, including a mixture of low-cost, core, income, smaller company and adventurous options.

It covers the whole universe and incorporates funds, investment trusts, active and passive options (including ETFs) and alternative assets. The full methodology can be viewed on the ii website.

Moira O’Neill, Head of Personal Finance at interactive investor, says: “Last year was a tough year emotionally, socially and economically – and many investors’ portfolios will have taken a battering, especially those that are UK-focused. But our customers, in median average terms, held up against a challenging UK market last year, boosted by overseas exposure.

“Even in less extraordinary times, the New Year is a good time to reassess, and perhaps introduce some nips and tucks to a portfolio – and Super 60 is no different. We won’t get it right all the time, but we try to find the best long-term options across our different investment categories to suit a variety of objectives and risk profiles.”

New additions

The following investments have been added to the roster (rationales for the new entrants can be found here).

• Capital Gearing Trust (LSE:CGT) (investment trust) as Mixed Assets Core option.
• Fidelity Multi-Asset Income Fund as Mixed Assets Income option.
• iShares Global Property Securities Equity Index Fundas Low-Cost Property option – may suit passive investors who are looking to get exposure to the property sector, but are concerned about liquidity in direct ‘bricks-and-mortar’ property funds.
• Vanguard FTSE All-World High Dividend Yield ETF (LSE:VHYL)as Low-Cost Global Equity Income option.
• Diverse Income (LSE: DVI)(investment trust) as UK Equity Income Smaller Company option.
• Legg Mason IF ClearBridge Global Infrastructure Income as an Alternative Core option.

Removals

The SPDR S&P Global Dividend Aristocrats ETF (LSE:GLDV) has been removed due to the higher risks attached to this strategy. interactive investor analysis found the market environment has resulted in higher volatility and larger than expected tracking error. This is suitable as a satellite holding and we have replaced with a broader strategy from Vanguard FTSE All-World High Dividend Yield ETF.

The North American Income Trust (LSE:NAIT) also lost its place following an extended period of unsatisfactory performance. Interactive investor did not find enough evidence of the managers’ decisions and stock picks adding value to the overall performance over the long term. The US is also not a typical region where investors hunt for income.

Dzmitry Lipski, Head of Fund Research at interactive investor, says: “What a year it was for our Super 60 constituents, which have had to contend with heightened market volatility stoked by the coronavirus pandemic. Across active funds, 70% were in positive territory in 2020 and overall, 67% of funds are in first and second quartile against their peers over three years and 76% over five years.

“Scottish Mortgage was the absolute champion among the Super 60, delivering 110% total return for the 12 months to 31 December 2020. As China seems to have managed to deter the virus better than its Western peers, Fidelity China Special Situations performed extremely well, returning 69% in 2020. Our Japanese investment trust and fund selections also demonstrated particularly strong performance, with Baillie Gifford Shin Nippon up 49%, strongly supported by its relatively large position in technology, and Legg Mason Japan Equity delivering a 41% total return, boosted by its overweight position in healthcare.

“On the other hand, capital-intensive industries, including property, were last year’s biggest casualties. BMO Commercial Property lost 28% over one year, but due to its closed-ended structure, investors in the trust had uninterrupted access to their money while all major property funds were gated during the year owing to excessive redemption requests.

“The BMO Commercial Property Trust remains, alongside TR Property. However, this month we added iShares Global Property Securities Equity Index Fund, which may suit passive investors looking for property exposure. Because it invests in property shares, liquidity is not an issue, but it will not have quite the same diversification benefits as direct property.

“Super 60 remains a high conviction list of best-in-class collective investments across different assets based on a stringent methodology aimed at separating the wheat from the chaff, with the view to holding the product for the long term. As market conditions continue to evolve, so does our list.”

Top five ii Super 60 funds in 2020

Source: Morningstar. Total returns in sterling. Past performance is no guide to the future.

Bottom five ii Super 60 funds in 2020

Source: Morningstar. Total returns in sterling. Past performance is no guide to the future.