Star City fund managers fall to the ground

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RITAIN’s top fund managers are almost all significantly underperforming the stock market this year, costing their army of fans in the city and among retail investors billions of pounds.

Research for the Evening Standard shows that of the 18 fund categories created by the Investment Association – from global emerging markets to Europe to America and Japan – all but one are below their index of reference.

All but Latin America have lost money since last year.

Big names that are far behind the market include Terry Smith, Nick Train and Stephen Yiu.

Together they manage billions of pounds on behalf of many thousands of investors, some of whom rely on the funds for their retirement.

The funds take higher fees than simple index trackers in the hope that they beat the stock market. Lately, they’ve been doing worse, in some cases much worse, than markets that are also well down as global recession fears mount.

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The IA, whose members oversee around £10 trillion on behalf of millions of Britons, said: “There is no doubt that investors and fund managers have been hit hard by the negative market conditions and economy this year, which were driven by many factors, including the war in Ukraine. However, the investment is longer-term and the investment managers provide significant long-term value for investors.

Terry Smith, a city legend with hard-hitting views who is the founder of Fundsmith, said: “The Fundsmith Equity Fund invests in a small number of high quality companies. This has been our strategy since day one and it will not change. While a period of underperformance is never welcome, it is nonetheless inevitable. No investment strategy will outperform in every reporting period and in every type of market condition.

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We are focused on delivering strong returns to our investors over the long term. »

Lindsell Train did not respond to a request for comment. However, Train recently apologized for the performance of its funds.

Alan Miller of SCM Direct, who conducted the research, said: “For decades UK retail investors have been sold a story. The UK investment industry has woven the story that higher fees for active management get you better performance, especially when times are tough. The investment industry is a well-oiled marketing machine that sells retail investor stories. Now one of the main stories has turned out to be a myth.

The Investment Association is led by Managing Director Chris Cummings.

Its average fund is almost 4% below the comparable index in the six months to the end of June. UK All Companies funds, a popular category, are down 12.6%, 6.6% lower than the FTSE All Share index.

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A recent survey shows that fund managers are more pessimistic about global growth prospects than they have been in 30 years. Privately, some complain that the pressure to be seen to invest ethically makes it more difficult for investors to be profitable.

More stars? It’s performance Jim, but not as we know it

Terry Smith: £22bn Fundsmith down 21% vs. 12% for MSCI World Index

Nick Train: £5bn Lindsell Train UK Equity Fund down 16% vs 4.6% for FTSE All Share

Stephen Yiu: Growth of £850m for Blue Whale down 32% vs. 12% for MSCI World

James Anderson (to April): £10bn Scottish Mortgage Investment Trust down 46% vs 12% for MSCI World Index

All figs year to June 21

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