Rally leaves 'high beta' UK smaller companies funds behind

The vast majority of UK smaller companies funds have failed to produce significant alpha for investors over the past year, with the average fund's return lagging one benchmark index by ten percentage points.

The average fund in the IMA UK Smaller Companies sector returned 18.4% over the year to 31 March, well below benchmark indices, suggesting investors would have been better off tracking the index. The FTSE Small Cap ex-ITs index produced a total return of 28%, with the Numis Smaller Companies ex-ITs index returning 25.6% over the same period. In total, just seven of the 56 funds in the small-cap sector beat the FTSE Small Cap total return over the year to 31 March. Top performers over one year include offerings from River & Mercantile, Fidelity, Henderson and Cazenove. Investors hav...