Funds for the pandemic

The market sell-off that began in February 2020 has been the fastest ever bear market. In a matter of weeks, equity markets were down almost 40% across the board. Investors were caught out by the speed and unforgiving nature of the sell-off. As my recent newsletters have explained, there have been few havens. Even bonds capitulated alongside other traditional haven assets such as gold.

Positive momentum across asset markets evaporated and the downtrend has not yet been reversed. It has, of course, meant that the 80-20 Investor BFBS tables have dwindled leaving just a smattering of funds, mostly invested in government bonds, such as gilts and treasuries. In fact the table below shows the only funds out of the 2,320 unit trusts out there to have made a profit during the sell-off between 20th February and the low of the 23rd March.

Name	Member Of	ISIN Code	% Return 20/02/2020 to 23/03/2020
M&G Global Government Bond	Global Bonds	GB00B7J76C49	1.16
M&G European Corporate Bond	Global Bonds	GB00B7MT0707	0.91
Royal London European Corporate Bond	Global Bonds	GB00BG0ZNN01	1.76
ASI Euro Corporate Bond	Global Bonds	GB00BWK27T75	0.29
BNY Mellon International Bond	Global Bonds	GB0006779655	9.73
Courtiers Investment Grade Bond	Global Bonds	GB00BYXVV711	2.6
iShares Overseas Government Bond Index (UK)	Global Bonds	GB00B849C803	12.84
Janus Henderson Inst Overseas Bond	Global Bonds	GB0007673055	10.88
M&G Global Macro Bond	Global Bonds	GB00B78PLC47	9.17
Royal London International Government Bond	Global Bonds	GB00B45XHL18	0.44
Scottish Widows International Bond	Global Bonds	GB0031910978	11.56
T. Rowe Price Dynamic Global Bond	Global Bonds	GB00BD0NLR34	1.08
Threadneedle Dollar Bond	Global Bonds	GB0002771946	6.71
Threadneedle European Bond	Global Bonds	GB0002773769	7.47
Threadneedle Global Bond	Global Bonds	GB0001533685	11.44
Thesis PM	Mixed Investment 40-85% Shares	GB00B3V32G87	0.52
Aviva Inv Asia Pacific Property	Property Other	GB00B2RJM074	11.9
TIME Investments Freehold Income Authorised	Property Other	GB00B9LV6956	0.2
TM Home Investor	Property Other	GB00B9608795	0.07
ASI Strategic Investment Allocation	Specialist	GB00B1YXMW71	27.12
VT Clear Peak Capital UK Long/Short Equity	Specialist	GB00BJXS2B80	4.74
Allianz Strategic Bond	Sterling Strategic Bond	GB00B06T9362	7.87
FP Carmignac Unconstrained Global Bond	Sterling Strategic Bond	GB00BJHPJ035	2.48
Schroder SUTL Cazenove Charity Bond	Sterling Strategic Bond	GB00BF784C14	1.52
Argonaut FP Argonaut Absolute Return	Targeted Absolute Return	GB00B7FT1K78	10.07
Jupiter Absolute Return	Targeted Absolute Return	GB00B5129B32	0.5
Omnis Investments Ltd Omnis Diversified Returns	Targeted Absolute Return	GB00BJ5FRR89	1.27
TM Fulcrum Diversified Absolute Return	Targeted Absolute Return	GB00B7N2V536	7.37
ASI Sterling Long Dated Government Bond	UK Gilts	GB00BZ4BR247	6
ASI UK Government Bond	UK Gilts	GB00B6WZXS38	3.77
HSBC Common Fund for Income	UK Gilts	GB0003458311	1.25
iShares Over 15 Years Gilts Index (UK)	UK Gilts	GB00BF338G29	5.55
Janus Henderson Inst Long Dated Gilt	UK Gilts	GB00BJ0LFY40	4.76
ASI Sterling Short Term Government Bond	UK Gilts	GB00BWK25J38	1.15
Royal London Short Duration Gilts	UK Gilts	GB00BD050C73	0.4
Wesleyan Risk Averse	UK Gilts	GB00BYNYHM79	0.89
SJP Gilts	UK Gilts	GB00B8XD9J37	0.64
HSBC UK Gilt Index	UK Gilts	GB00B4581C50	3.08
L&G All Stocks Gilt Index Trust	UK Gilts	GB00B8344798	2.99
iShares UK Gilts All Stocks Index (UK)	UK Gilts	GB00B83HGR24	3.03
PUTM Bothwell Sub-Sovereign Bond	UK Gilts	GB00BYZK4J99	0.09
LF Canlife UK Government Bond	UK Gilts	GB00BLDYKJ43	3.31
ASI (AAM) Sterling Government Bond	UK Gilts	GB00BWK26Q79	3.59
HSBC Gilt & Fixed Interest	UK Gilts	GB0000154681	2.84
Threadneedle UK Fixed Interest	UK Gilts	GB00BD8GMJ34	2.94
Threadneedle Sterling Bond	UK Gilts	GB0002777745	2.93
Schroder Gilt & Fixed Interest	UK Gilts	GB00BYTQ7F09	2.82
Quilter Investors Gilt Index	UK Gilts	GB0032543984	3.99
Omnis UK Gilt	UK Gilts	GB00BF0XDK42	3.27
Janus Henderson Inst UK Gilt	UK Gilts	GB00BJ0LG189	2.33
Epworth Sovereign Bond For Charities	UK Gilts	GB00BJBT2V31	2.93
M&G Gilt & Fixed Interest Income	UK Gilts	GB0031108433	2.46
Royal London UK Government Bond	UK Gilts	GB00B881TW52	2.23
Santander Sterling Government Bond	UK Gilts	GB00BSTLRD18	2.11
Allianz Gilt Yield	UK Gilts	GB0031383283	3.46
Franklin UK Gilt	UK Gilts	GB00BYZCTV27	3.58
Vanguard UK Long Duration Gilt Index	UK Gilts	GB00B4M89245	7.65
Scottish Widows Gilt	UK Gilts	GB00B8DK6372	2.12

 

97% of unit trusts lost money during the sell-off, irrespective of the underlying assets they invested in. More notably only 4 Targeted Absolute Return funds made a profit, as shown above, which is poor given that they are often marketed as being able to make money in most market conditions. If the market downtrend were to resume and the coronavirus outbreak escalate then obviously cash is the only guaranteed safe place to be. But trying to time the market (exiting and then re-entering) is almost impossible to get right. If investors want to remain invested in the market it does raise the question of where might they invest other than perhaps the funds listed above. Especially if they want exposure to certain equity markets or sectors. Which have proved most resilient in the market downturn, albeit having still lost money?

What has made this sell-off particularly tricky to navigate is that historical precedents have not been followed. Bond funds have performed poorly and even defensive equity sectors have been hammered at times. The rule book has been torn up, largely because we've never encountered a situation like this where large swathes of the global population are in lockdown.

However, it is possible to identify those funds that fared better than their peers during the sell-off. That doesn't mean they haven't fallen in value, significantly in some cases. But you can identify those funds that have shown a level of consistency before and after the start of the market slump, relative to their peers. There are funds that have shown signs of relative strength during this crisis. Of course, that's not to say they will continue to perform well if the market continues to slump but, recent history suggests they've been weathering this storm better than their peers.

To identify those funds I decided to look at the performance during three key periods, which are listed below

• The three months prior to the sell-off (which began on 20th February)
• The period from the beginning of the sell-off to the recent low on 23rd March
• The period from the beginning of the sell-off to the 27th March (the rebound high)

For ease I will call these:

• pre-bear market
• worst of the bear market
• after a bear market rebound

Normally when I look at funds and consistency I often include statistics such as the alpha, beta etc (see my consistent funds post). However, given the speed and ferocity of this sell-off such statistics are difficult to determine. As such I just focused on the performance of funds, versus their peers, during the three periods listed above.

For each period I calculated the performance of all 2,320 unit trust funds out there and then ranked them within their respective sectors from best to worst. For a fund to make the shortlist it had to:

• have performed better than the average of its peer group in the lead up to the sell-off (pre-bear market). The reason for this is because if I just focused on the performance of the funds during the sell-off I would just reproduce the list above which is full of defensive assets/funds. I am looking to determine the funds that were performing above average in a rising market that then rode the coronavirus pandemic sell-off better than their peers.
• also have been in the top 10% of performers for their respective sectors during the worst of the bear market sell-off to date. Of course that will still mean that equity-based funds will be showing some hefty losses but relative to their peers they have preserved capital better.
• finally, the funds had to remain in the top quartile of funds within their sector (top 25%) even after the recent bear market rally. We don't just want funds that won't achieve any of the upside when the recovery eventually hits.

This left 77 funds which are listed below alongside their ISIN number and their respective performance figures across each time frame analysed. I have also included the sector averages for each timeframe for comparison purposes.

Fund	Sector	ISIN Code	Pre-bear market	Worst of the Bear Market	After a bear market rebound
Allianz Total Return Asian Equity	Asia Pacific Excluding Japan	GB00B1FRQV53	6.26	-13.68	-9.48
Investec Asia Pacific Franchise	Asia Pacific Excluding Japan	GB00B85KZC70	8.51	-17.28	-14.53
JPM Asia Growth	Asia Pacific Excluding Japan	GB00B1XMSK57	6.1	-17.64	-13.4
Barings Eastern Trust	Asia Pacific Excluding Japan	GB0000799923	4.46	-16.73	-13.99
Fidelity Asia	Asia Pacific Excluding Japan	GB00B6Y7NF43	5.38	-17.8	-14.92
	Sector average		4.07	-21.71	-17.69
ASI Europe ex UK Equity	Europe Excluding UK	GB00B0LG6N13	8.82	-21.57	-16.25
Jupiter European	Europe Excluding UK	GB0006664683	8.64	-21.97	-16.17
Liontrust Sustainable Future European Growth	Europe Excluding UK	GB0030029390	10.12	-22.17	-17.31
FP Carmignac European Leaders	Europe Excluding UK	GB00BJHPHZ49	10.13	-22.04	-17.62
Threadneedle European Select	Europe Excluding UK	GB0001529345	6.18	-21.54	-16.05
Fidelity European	Europe Excluding UK	GB00BFRT3504	6.64	-22	-17.59
Smith & Williamson European Equity	Europe Excluding UK	GB0008192840	7.3	-23.71	-19.29
L&G European Trust	Europe Excluding UK	GB00B7J5FY33	9.86	-22.92	-16.98
	Sector average		5.35	-27.07	-21.91
Troy Asset Management Ltd Trojan Ethical	Flexible Investment	GB00BJP0XX17	4.56	-8.58	-4.43
Troy Asset Management Ltd Trojan	Flexible Investment	GB0034243732	5	-9.86	-5.76
First State Diversified Growth	Flexible Investment	GB00BVXC2S15	6.11	-11.09	-12.67
Thesis The Diversification ICVC	Flexible Investment	GB0031645491	5.24	-11.68	-11.04
Thesis Staderas	Flexible Investment	GB00B4ZLBD51	4.53	-10.21	-9.03
	Sector average		4.49	-20.66	-16.66
FP Carmignac Emerging Markets	Global Emerging Markets	GB00BK1W2P36	8.96	-21.11	-15.54
Schroder Global Emerging Markets	Global Emerging Markets	GB00B76V5Q67	6.06	-21.8	-19.25
	Sector average		5.25	-24.77	-20.98
Troy Asset Management Ltd Trojan Global Income	Global Equity Income	GB00BD82KP33	6.29	-18.31	-14.16
Premier Global Optimum Income	Global Equity Income	GB00BFZND652	5.09	-20.92	-17.33
TB Chawton Global Equity Income	Global Equity Income	GB00BJ1GXX37	9.1	-21.81	-16.8
	Sector average		5.64	-26.97	-21.61
Schroder Global Healthcare	Global	GB00B76V7Q08	11.08	-15.4	-12.35
SJP International Equity	Global	GB0008377250	11.45	-18.77	-15.85
L&G Global Health & Pharmaceuticals Index Trust	Global	GB00B0CNH387	7.99	-17.21	-13.33
SJP Worldwide Income	Global	GB00BZ5Z1C39	8.56	-19.23	-15.21
Artemis Global Select	Global	GB00B568S201	7.22	-19.4	-16.2
Baillie Gifford Long Term Global Growth Investment	Global	GB00BD5Z0Z54	25.05	-19.5	-12.57
Elite EF Rosevine Capital Global Equity	Global	GB00BFWYM202	13.54	-19.61	-13.48
COIF Charities Global Equity Income	Global	GB00B29KPX27	10.74	-19.49	-14.88
Thesis Lion Growth	Global	GB0008222936	10.14	-18.95	-14.17
Dundas Partners LLP Heriot Global	Global	GB00B99M6Y59	7.84	-19.31	-13.34
	Sector average		7.05	-24.02	-19.01
Threadneedle Japan	Japan	GB0001529121	-1.25	-8.53	-5.06
	Sector average		-3.63	-14.61	-8.82
Vanguard LifeStrategy 20% Equity	Mixed Investment 0-35% Shares	GB00B4NXY349	3.16	-7.51	-5.22
	Sector average		2.54	-11.99	-9.64
Sarasin GlobalSar Strategic	Mixed Investment 20-60% Shares	GB00B8DPZ138	4.99	-11.64	-9.4
Zurich Horizon Multi-Asset I	Mixed Investment 20-60% Shares	GB00BTKH4895	3.97	-11.95	-8.7
FP Carmignac Patrimoine	Mixed Investment 20-60% Shares	GB00BK1W2N12	6.43	-11.34	-9.26
Vanguard Target Retirement 2015	Mixed Investment 20-60% Shares	GB00BZ6VHV15	3.18	-11.87	-9
	Sector average		3.15	-17.74	-14.2
DMS Stirling House Balanced	Mixed Investment 40-85% Shares	GB00B99R1674	4.73	-10.56	-8.78
Barclays Multi-Impact Growth	Mixed Investment 40-85% Shares	GB00BYPZYN82	5.17	-15.65	-12.29
Margetts Sentinel Growth Portfolio	Mixed Investment 40-85% Shares	GB00BZ0P5600	5.96	-13.66	-12.39
TM Cerno Pacific	Mixed Investment 40-85% Shares	GB00BDCJ9Z32	9.52	-14.06	-8.47
DMS Stirling House Growth	Mixed Investment 40-85% Shares	GB00B99R1450	6.03	-14.3	-12.15
Liontrust Balanced	Mixed Investment 40-85% Shares	GB00B85K7211	10.13	-16.8	-11.96
Thesis TM Private Portfolio	Mixed Investment 40-85% Shares	GB00B9N2ZM26	4.56	-15.35	-12.1
Thesis Latour Growth	Mixed Investment 40-85% Shares	GB00B54VZ198	4.97	-16.04	-12.66
DMS Kleinwort Hambros Multi Asset Balanced	Mixed Investment 40-85% Shares	GB00B15PCY48	4.51	-15.45	-13.06
	Sector average		4.34	-21.48	-17.18
Artemis US Extended Alpha	North America	GB00BMMV5G59	10.19	-21.92	-17.8
Morgan Stanley US Advantage	North America	GB00BZ4CG750	14.36	-20.41	-15.05
Investec American Franchise	North America	GB00B839DR76	11.17	-22.69	-16.23
Marlborough US Multi-Cap Income	North America	GB0001722882	10.34	-18.9	-15.75
	Sector average		8.93	-26.02	-20.77
ASI Strategic Investment Allocation	Specialist	GB00B1YXMW71	4.62	27.12	17.69
LF Bentley US Dollar Balanced	Specialist	GB00B0XQ3L61	4.23	-4.25	-6.11
LF Ruffer Gold	Specialist	GB00B8510Q93	13.25	-4.4	-0.4
	Sector average		4.15	-23.77	-19.38
Barclays Sterling Bond	Sterling Strategic Bond	GB00B72Y6K08	3.13	-0.93	-0.32
	Sector average		2.61	-10.13	-8.11
Argonaut FP Argonaut Absolute Return	Targeted Absolute Return	GB00B7FT1K78	18.17	10.07	5.83
Kames UK Equity Absolute Return	Targeted Absolute Return	GB00B504CH73	2.94	-0.2	0.52
	Sector average		2.32	-9.87	-8.2
VT Castlebay UK Equity	UK All Companies	GB00BV0LF607	6.15	-26.01	-19.88
Scottish Widows Environmental Investor	UK All Companies	GB00B7KLBY27	7.31	-23.95	-18.57
VT Vanneck Equity	UK All Companies	GB00BJ4G2665	5.75	-28.43	-21.88
IFML Vitality UK Listed Equity	UK All Companies	GB00BFWVCM12	6.24	-29.08	-20.84
Liontrust Special Situations	UK All Companies	GB00B57H4F11	5.69	-29.6	-22.63
VT The Beagle	UK All Companies	GB00B5SL2W51	10.49	-21.68	-21.68
Royal London Sustainable Leaders Trust	UK All Companies	GB00B7V23Z99	10.14	-27.39	-20.07
MFM Bowland	UK All Companies	GB0008265307	9.38	-24.06	-24.06
CFP SDL Free Spirit	UK All Companies	GB00BYYQC271	11.85	-28.81	-22.93
Unicorn Outstanding British Companies	UK All Companies	GB00B1GFWW16	9.12	-29.79	-25.07
	Sector average		6.09	-35.72	-28.27
ES R&M UK Equity Income	UK Equity Income	GB00B3KQG447	6	-30.13	-20.55
Fidelity Enhanced Income	UK Equity Income	GB00B87HPZ94	5.71	-30.82	-23.52
FP Octopus UK Multi Cap Income	UK Equity Income	GB00BG47Q333	11.76	-28.96	-23.94
LF Gresham House UK Multi Cap Income	UK Equity Income	GB00BYXVGS75	13.29	-30.13	-26.26
	Sector average		5.37	-35.68	-28.5
iShares Over 15 Years Gilts Index (UK)	UK Gilts	GB00BF338G29	3.99	5.55	6.2
Vanguard UK Long Duration Gilt Index	UK Gilts	GB00B4M89245	4.96	7.65	7.06
ASI Sterling Long Dated Government Bond	UK Gilts	GB00BZ4BR247	3.96	6	6.62
	Sector average		2.18	2.56	3.13
FP Octopus UK Micro Cap Growth	UK Smaller Companies	GB00BYQ7HN43	12.66	-29.92	-23.75
Liontrust UK Smaller Companies	UK Smaller Companies	GB00B57TMD12	15.1	-32.56	-26.44
	Sector average		11.32	-37.96	-31.69