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Willis Owen reveals the best & worst sectors and funds over the past decade

Posted by Adrian Lowcock in Press releases category on 02 Jan 20

  • Technology led global markets over the past decade
  • Top ten performing funds are a mix of technology focused, Japanese small cap and UK Smaller companies
  • Energy funds took half of the top 10 worst performer
Adrian Lowcock, Head of Personal Investing, Willis Owen says:

“The start of the decade saw the back of the worst of the financial crisis for investors but its impact has continued to be felt throughout the last ten years. Low interest rates and quantitative easing become the backdrop for market performance. Investors remained nervous for much of the first half the 2010’s, as concerns persisted that the global economy and financial system could still collapse. Even in the latter half the rally in equity markets was treated with suspicion by investors and was frequently termed the most unloved bull market in history. 

In a world of low interest rates and low growth, investments in companies that offered much higher levels or high consistent growth were attractive to investors. Technology, having been in the wilderness since the bursting of the dotcom bubble, lead the way with a new generation of tech companies from Facebook to Netflix offering investors huge growth potential. Although technology was a strong performer, the US market as a whole benefited from the US Federal Reserves policies and government action during the financial crisis. Smaller company sectors feature in the top 10 as they avoided the worst of the financial crisis and benefited from low interest rates due to being able to utilise the new technologies. 

Legg Mason IF Japan Equity was the best performing fund as exposure to the higher risk Japanese small caps paid off on hopes Japan was finally out of its deflationary spiral and growth would return. The likes of Merian UK Smaller Companies Focus and TB Amati UK Smaller Companies shows that the UK remained an attractive market for investors even though a Brexit  cloud hung over the country for over a third of the last decade.

10 best-performing sectors

Investment Association Sector Percentage Return
Technology & Telecommunications 310.88
North American Smaller Companies 279.55
North America 248.61
Japanese Smaller Companies 246.59
UK Smaller  Companies 245.71
European Smaller Companies 179.07
Global  149.15
Global Equity Income 143.71
Japan 141.40
UK All Companies 129.78
Source: FE Analytics, performance from 31st December 2009 to 31st December 2019 in pounds sterling on a total return basis

10 best-performing funds

Funds Percentage Return
Legg Mason IF Japan Equity 701.17
Polar Capital Global Technology 476.89
Candriam  Equities L Biotechnology 474.32
Merian UK Smaller Companies Focus 454.54
Slater Growth 440.34
GAM Multistock Health Innovation Equity 431.47
Fidelity Global Technology 428.43
TB Amati UK Smaller Companies  426.80
Baillie Gifford Japanese Smaller Companies 421.94
Vanguard US Opportunities 419.93
Source: FE Analytics, performance from 31st December 2009 to 31st December 2019 in pounds sterling on a total return basis

“Moving to the other end of the spectrum, Targeted Absolute Return funds had a shocking decade. Having been promoted as an asset class to offer protection following the financial crisis the sector has subsequently struggled. This is a broad mix of investments and strategies so it is hard to judge the sector. The objectives of the sector through were always going to lag equity bull markets, but to make matters worse they also struggled to deliver when equity markets sold off. 

Bonds and diversified funds also lagged behind equity markets, which you would expect to happen in most rising markets especially as interest rates and bond yields had already fallen by the end of the previous decade. 

In funds, gold and energy stocks struggled. In a low interest rate world you might think gold would perform as its lack of yield is less important, however it also offers little growth unless investors value it as such. Having played its role as preserver of capital in the financial crisis gold plateaued for much the 2010’s and MFM Junior Gold suffered most as it had exposure to the more speculative end of the market. Likewise, MFM Junior Oils trust suffered as the oil price collapsed reaching a low in January 2016. Energy and mining stocks all struggled as global growth slowed, recession never seemed far away and China struggled to transition from a global exporter to a domestic consumer. Blackrock GF World Mining Trust lost just over 20% during the past 10 years.

10 worst-performing sectors

Investment Association Sector Percentage Return
Targeted Absolute Return 26.45
Global Bonds 50.98
Mixed Investment 0-35% Shares 52.14
Global Emerging Markets Bonds 58.68
Specialist 59.21
UK Gilts  64.74
Sterling Strategic Bond 64.96
UK Direct Property 66.88
Mixed Investment 20-60% Shares 67.23
Global Emerging Markets 68.23
Source: FE Analytics, performance from 31st December 2009 to 31st December 2019 in pounds sterling on a total return basis

10 worst-performing funds

Funds Percentage Return
MFM Junior Gold -70.54
MFM Junior Oils Trust -68.70
TC South River Gold and Precious Metals  -66.53
Schroder ISF Global Energy -51.99
Marlborough ETF Commodity  -34.03
ASI Strategic Investment Allocation -33.16
Guinness Sustainable Energy -29.92
VT Garraway Absolute Equity -24.37
Blackrock GF World Mining -20.50
Aviva European Property -17.81
Source: FE Analytics, performance from 31st December 2009 to 31st December 2019 in pounds sterling on a total return basis