ii Super 60 performance review: Q1 2023
14th April 2023 10:55
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Discover how interactive investor’s rated funds performed in the three months to the end of March.
The performance of the Super 60 funds over Q1 reflected market conditions, with higher yield stocks and smaller companies’ funds in the UK seeing a reversal of fortunes from Q4 2022. Continental European equities continued to provide strong returns in sterling terms, and funds investing in that region leading the performance list with four of the five top spots.
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The strongest performance over the quarter was seen by the Vanguard FTSE Developed Europe ex-UK (LSE:VERX) fund, which is a passively managed product that tracks the FTSE index of large and mid-cap stocks. The fund produced a positive return of 8.74% and was closely followed by the actively managed Man GLG Continental European Growth fund, which was 5 bps behind. Managed by the highly experienced Rory Powe, there is a clear focus on high-quality growth stocks in this concentrated portfolio. The growth investment style of the fund was in favour over the quarter, while at a more granular level the fund benefited from its longstanding overweight to consumer discretionary and especially the exposure to luxury brands such as Hermes (EURONEXT:RMS), Moncler (MTA:MONC), Ferrari (MTA:RACE) and LVMH (EURONEXT:MC).
The European Smaller Companies Trust (LSE:ESCT)returned 8.41% over the quarter, slightly behind its NAV return due to discount widening. Manager Ollie Beckett has been at Janus Henderson for more than 17 years and is experienced in this area of the market. There is a focus on identifying stocks that are mis-priced relative to their cash generation, with company meetings being key to the assessment. The fund has modest gearing and tends to do well during periods of market strength, such as Q1 2023.
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The final European fund in the list of top performers is the Janus Henderson European Selected Opportunities fund. This is a relatively recent addition to the Super 60, having been added at the start of 2023. The managers combine bottom-up and top-down research, paying close attention to global macro and sector trends. Manager John Bennett has added considerable value through stock selection over the years while also proving adept at steering the portfolio in line with his macroeconomic views. For the former, he focuses on identifying companies with attractive cash flow return on investment, or CFROI, that are undervalued, or those that are at inflection points where profit margins and/or CFROI are either improving or have the potential to do so in the future. Particular success over the quarter was seen from the fund’s exposure to IT stocks with names such as ASM International (EURONEXT:ASM), STMicroelectronics (EURONEXT:STMPA), BE Semiconductor Industries (EURONEXT:BESI) and Infineon Technologies (XETRA:IFX) all contributing strongly to the return of 7.42%.
Rounding out the top five performers on the Super 60 is Jupiter UK Special Situations. This UK equity fund produced a return of just over 7%. The managers aim to identify longer-term valuation anomalies by looking for stocks that have an attractive P/E ratio when calculated using 10-year average earnings but are nevertheless well-run companies with sound balance sheets. Qualifying stocks are then subject to fundamental analysis before being added to the portfolio, which is unconstrained relative to the FTSE All-Share benchmark. Despite its contrarian and value-orientated investment philosophy and bias down the market cap scale, the fund produced strong returns through being underweight to the weaker sectors in the UK market and from stock specific successes across a number of industries.
At the other end of the performance table was TR Property (LSE:TRY), a portfolio of pan-European property equities with a small allocation to physical property in the UK. The trust was down 8.67% in share price terms over the quarter and very slightly less in terms of NAV. Renewed concerns over rate rises, continued uncertainty over demand in the retail and office spaces and weakness in the industrial/retail warehouse sector after relatively strong performance have all contributed. Another property trust, Balanced Commercial Property (LSE:BCPT), also finds its way on to the list of weak performers, showing a decline of 5.56% in share price terms, however the NAV of this trust actually saw a modest positive return (1.02%). The trust provides exposure to prime UK commercial property with a heavy bias towards central London and southeast England. With an underweight to the industrial/retail warehouse sector in the southeast the trust avoided the worst of the devaluation in that sector while void rates and rent collections have all improved, however the uncertainty and general negative sentiment regarding commercial property weighed on the share price.
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TB Amati UK Listed Smaller Coms showed a negative return of 6.6% in Q1, with smaller companies being weak across geographies in sterling terms and UK small caps being particularly weak as investors continued to be concerned about the outlook for domestic growth relative to other global markets. The fund invests across AIM and FTSE 250 stocks but tends to have a smaller market-cap profile than its category peers which has not been beneficial.
Weakness in energy and agricultural commodities had an impact on the WisdomTree Enhanced Commodity Index ETF, which provides investors with exposure to four broad commodity sectors, namely energy, agriculture, industrial metals, and precious metals (plus up to 5% in bitcoin), primarily through futures contracts. The ETF saw a loss of just over 6% over the quarter.
And lastly, we have Scottish Mortgage (LSE:SMT). The trust showed a positive NAV return of 6.95%, reflecting its strong growth style bias. However, in share price terms there was a loss of 6.12% as investor demand for the trust slumped. The discount widened significantly as investors reacted to boardroom disagreements that were aired in the media, despite the investment approach employed by the team at investment manager Baillie Gifford remaining unchanged.
Top five Super 60 funds in Q1 2023
| Group/Investment | 3 Month | 1 Year | 3 Years | 5 Years |
| Vanguard FTSE Dev Eurp ex UK ETF Dis GBP (LSE:VERX) | 8.74 | 8.10 | 54.18 | 44.99 |
| Man GLG Continental Eurp Gr Prf Acc C | 8.69 | 3.84 | 35.57 | 40.54 |
| The European Smaller Companies Trust PLC (LSE:ESCT) | 8.41 | 4.96 | 122.30 | 37.50 |
| Janus Henderson European Sel Opps I Acc | 7.42 | 9.81 | 55.67 | 50.83 |
| Jupiter UK Special Situations I Acc | 7.09 | 9.86 | 66.76 | 34.24 |
Source: Morningstar Returns (GBP) - Total returns for OE Funds and Market Returns for Inv Trusts.
Bottom five Super 60 funds in Q1 2023
| Group/Investment | 3 Month | 1 Year | 3 Years | 5 Years |
| TR Property Ord (LSE:TRY) | -8.67 | -36.24 | -1.87 | -13.30 |
| TB Amati UK Listed Smaller Coms B Acc | -6.60 | -21.90 | 23.85 | 6.01 |
| Scottish Mortgage Ord (LSE:SMT) | -6.12 | -33.55 | 19.66 | 57.09 |
| WisdomTree Enhanced Cmdty ETF - USD Acc GBP (LSE:WCOB) | -6.11 | -5.22 | 71.81 | 53.83 |
| Balanced Commercial Property Ord (LSE:BCPT) | -5.56 | -24.94 | 25.76 | -26.92 |
Source: Morningstar Returns (GBP) - Total returns for OE Funds and Market Returns for Inv Trusts.
Top five Super 60 funds for a five-year period
| Group/Investment | 3 Month | 1 Year | 3 Years | 5 Years |
| Vanguard U.S. Eq Idx £ Acc | 4.25 | -3.17 | 64.66 | 82.29 |
| FTF ClearBridge Global Infras Inc WAcc | -1.60 | -3.62 | 47.83 | 81.36 |
| Fundsmith Equity I Acc | 6.92 | 2.19 | 44.89 | 80.18 |
| Premier Miton US Opportunities B Acc | -5.05 | -9.21 | 56.14 | 74.98 |
| Jupiter Merian North Amer Eq I GBP Acc | 2.75 | -3.27 | 65.03 | 74.15 |
Source: Morningstar Returns (GBP) - Total returns for OE Funds and Market Returns for Inv Trusts.
Bottom five Super 60 funds for a five-year period
| Group/Investment | 3 Month | 1 Year | 3 Years | 5 Years |
| Balanced Commercial Property Ord (LSE:BCPT) | -5.56 | -24.94 | 25.76 | -26.92 |
| Baillie Gifford Shin Nippon Ord (LSE:BGS) | -0.46 | -14.04 | 8.51 | -18.79 |
| Vanguard UK Govt Bd Idx £ Dist | 2.22 | -18.83 | -28.22 | -17.19 |
| TR Property Ord (LSE:TRY) | -8.67 | -36.24 | -1.87 | -13.30 |
| Lindsell Train Japanese Eq B GBP Qut Dis | -2.94 | 3.13 | -11.47 | -4.24 |
Source: Morningstar Returns (GBP) - Total returns for OE Funds and Market Returns for Inv Trusts.
Most-bought Super 60 funds in Q1 2023
| Scottish Mortgage Ord (LSE:SMT) |
| Fundsmith Equity I Acc |
| City of London Ord (LSE:CTY) |
| Vanguard LifeStrategy 80% Equity A Acc |
| F&C Investment Trust (LSE:FCIT) |
Most-sold Super 60 funds in Q1 2023
| Scottish Mortgage Ord (LSE:SMT) |
| Fundsmith Equity I Acc |
| City of London Ord (LSE:CTY) |
| Vanguard LifeStrategy 80% Equity A Acc |
| iShares Physical Gold ETC GBP (LSE:SGLN) |
Changes to the Super 60 list (under review/developments)
January 2023
Removal of TM Crux European Special Situations
Removal of IFSL Marlborough Multi Cap Growth Fund
Removal of Royal London UK Equity Income Fund
Removal of Mobius Investment Trust
Removal of iShares Environment Low Carbon Tilt Real Estate Index
Inclusion of Janus Henderson European Selected Opportunities
Inclusion of Fidelity Special Values (LSE:FSV)
Inclusion of Artemis Income
*Reclassified – Man GLG Continental European Growth (Moved from Core to Adventurous)
February 2023
Under Review: Ninety One UK Alpha
Super 60 videos in Q1
Fidelity China Special Situations
Fidelity China Special Situations trust: two of my favourite shares
China is volatile but the future for stock investors is bright
Artemis SmartGARP Global Equity
The shares and sectors our algorithm is telling us to buy
Our algorithm has never been so bullish on value shares
Vanguard LifeStrategy 20% Equity, 60% Equity and 80% Equity
Day in the life of a fund manager: Vanguard’s Mohneet Dhir
M&G Global Macro Bond
The Super 60 investments list is selected and managed by our independent research partner Morningstar and reviewed by our in-house investment experts to help narrow down the wide choice of available investment products. We believe it represents a set of high-quality choices, across different asset classes, regions, and investment types.
However, you should note that the selection of Super 60 investments list is not a ‘personal recommendation’. This means we have not assessed your investment knowledge, your financial situation (including your ability to bear losses), your investment objectives, your risk tolerance, or your sustainability preferences.
You should ensure that any investment decisions you make are suitable for your personal circumstances, and if you are unsure about the suitability of a particular investment or think you need a personal recommendation, you should speak to a suitably qualified financial adviser.
The past performance of an investment is not a reliable indicator of future results, and ii does not guarantee or predict the future performance of the Super 60 investments list as a whole or the constituent investments.
Risk Warning(s)
The value of your investments may go down as well as up. You may not get back all the money that you invest.
Investing in emerging markets involves different risks from developed markets, in many cases the risks are greater.
The value of international investments is affected by currency fluctuations which might reduce their value in sterling.
Disclosure(s)
All funds listed are the Accumulation version of the fund, where available, where any income generated within the fund is reinvested automatically. Income versions of these funds may also be available for investors looking for income generated to be paid directly into their account.
Annual performance can be found on the factsheet of each fund, trust or ETF. Simply click on the asset’s name and then the performance tab.
Any changes to the Super 60 investments list and the rationale behind those decisions will be communicated through the Quarterly Investment Review.
Details of all Super 60 recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Members of ii staff may have holdings in one or more Super 60 investments, which could create a conflict of interest. Any member of staff involved in the development of research about any financial instrument in which they have an interest are required to disclose such interest to ii. We will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, staff involved in the production of the Super 60 investments list are subject to a personal account dealing restriction. This prevents them from placing a transaction in the specified instrument(s) for five working days before and after an investment is included or amended and made public within the Super 60 investments list. This is to avoid personal interests conflicting with the interests of investors in the Super 60 investments.