With the third quarter of 2018 at an end, data from FE Analytics shows a dramatic change in the constituents of the top 50 best performing funds over the three quarters of 2018 to date, compared with the last three quarters of 2017. From April to December 2017, not one IA North America fund made the top 50, or even the top 100. In a huge turnaround, this year to date IA North America accounted for 46% of the top 50 best performing funds and 45% of the top 100 funds.
Tanvi Kandlur, fund analyst at FE comments: “North American domination this year is down to above-trend growth, tax cut-stimulated robust earnings and strong business and consumer sentiment. The US equity market has generally been less vulnerable to potential trade tensions compared to other developed economies. While US returns have largely been driven by a handful of tech stocks in previous years, this year the returns are coming from a variety of stocks in different sectors.
“In 2017, the weakened US Dollar dented returns in Sterling terms, which explains why ̶ despite a strong upward year ̶ it wasn’t the strongest performing asset class.”
Despite an upward surge in performance posted by IA North America funds, FE data shows that they have not attracted any more attention from financial advisers.
Kandlur explains: “This could be down to a variety of factors. Firstly, there has been a lot of talk about how valuations are expensive in the US both on a relative and absolute basis versus history, so it may be that advisers are waiting for a better entry point. Also, home bias also plays a role where advisers typically feel more comfortable investing in their home market over others despite better opportunities elsewhere, purely because it is familiar.”
*For more information or charts related to this data, please contact the FE press office at: [email protected]
