Fund managers struggling with consistency of returns

Return_on_investmentFund managers investing portfolios for UK investors are finding it difficult to produce consistently positive returns over three years, research shows.

BMO Global Asset Management (BMO GAM) found that only 1.6% of funds delivered consistent top quartile performance over three years to the end of the second quarter (Q2) in 2018. This equated to 18 of 1,132 funds.

The asset manager said the historic average is between 2% and 5%.

Of the 12 main Investment Association sectors researched, the IA sterling corporate bond sector was the one with the highest percentage of managers producing positive returns over this timeframe, with 3.7%. The three most consistent performers in this sector were focused mainly on long-duration bonds.

Kelly Prior, investment manager in BMO GAM’s multi-manager team, said: “Despite the positive market moves in the second quarter of 2018, our research shows fund managers continue to find it challenging to deliver consistent positive returns over three years.”

Of the better performing sterling credit funds, she said it would be interesting to see if the long-duration theme was repeatable.

“Should we see a change in the expectations of future interest rates and therefore a shift in the yield curve it would take a very different mandate to outperform in both areas of investment.”

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