Active funds achieve most consistent three year returns since 2008
IA North American most consistent sector
Actively managed funds have delivered their greatest consistency of top quartile returns over three years since 2008, according to the latest BMO Global Asset Management Multi-Manager Fund Watch survey.
The BMO MM Consistency Ratio, which details top-quartile returns over three years, saw 5% of funds deliver consistent top performance over three years to the end of Q2 2020, up from 3.9% in Q1.
BMO Fund Watch Survey: 2.4% of funds manage consistent top-quartile gains over last decade
With 54 of 1,089 eligible funds achieving this performance, the end of June saw a much greater ratio than the typical historic range of approximately 2-4%.
Most consistent of all was the IA North American sector, in which 12.6% of funds delivered top-quartile returns over three years, followed by IA Emerging Markets and IA Sterling Corporate Bond, with 7.4% and 7.1% respectively.
At the other end of the scale were IA Japan, IA UK Income and IA Sterling Strategic Bond, of which not one delivered a single fund that achieved the required level of consistency.
Reducing the consistency ratio to beating median returns, 18.8% achieved the lower standard and none of the 12 main IA sectors was without a fund that met this requirement.
IA North American was again top, with 33.3% of funds performing above the median for three consecutive years, followed by IA UK Smaller Companies and IA Global Equity, with 25.5% and 24.8% respectively.
With one exception, every IA sector saw positive returns over Q2 2020, with only IA UK Direct Property delivering a loss of 3.7%.
Across UK equity, IA UK Smaller Companies performed best, gaining 19.9% over the quarter, however it is still down 16% year-to-date and is followed by IA UK All Companies, which rose 14.3%, but is also down for the year by 18%.
All bond sectors improved, led by IA Sterling High Yield, which gained 11.7% over the quarter, while the IA Strategic Bond sector is up 0.7% year to date.
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Elsewhere, IA Targeted Absolute Return gained 4.6% in Q2 but remains 2.8% down year to date, IA Mixed Investment 40-85% Shares is up 13.2% for the quarter and the IA Global Equity sector has beaten IA Global Equity Income, up 19.2% against 14.2%.
Kelly Prior, investment manager in BMO Global Asset Management's multi-manager people team, said: "The second quarter of 2020 saw the highest proportion of funds deliver top quartile performance consistently over a three-year period since the launch of our FundWatch survey in 2008.
"We have witnessed various market environments during this period, but nothing as unpredictable as what investors are facing today. It is pleasing to see that our analysis shows that there are active managers out there who are navigating the current challenges well and are delivering value to investors.
"To try to accurately predict how the second half of the year's market moves would be a fool's errand. We urge investors to remind themselves that investing is for the long-term, not for the next month or quarter, and trust that some fantastic opportunities will be presented for those who are willing to withstand volatility in the short-term."
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