ii Super 60 performance review: Q2 2022
14th July 2022 11:13
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Discover how interactive investor’s rated funds performed in the three months up to the end of June.
Those funds with greater exposure to more defensive and commodity-related areas tended to fare better, and, as a result, the value equity style again outperformed growth. In terms of geography, the backdrop continued to favour the UK in developed markets due to its greater exposure to value areas, such as materials and energy. But despite this relative advantage, the market as a whole still showed a negative return of 5%.
The clear winner was China where equities recovered strongly (MSCI China showed a 12% gain) as growth-constraining Covid restrictions were lifted and sentiment regarding links with Russia became less negative.
Super 60 performance
The strongly positive returns for Chinese equities helped Fidelity China Special Siutations (LSE:FCSS)become the top-performing fund in the Super 60 by a considerable margin. The fund returned 14.53%, and therefore added value over the broader market. However, much of this return was due to the investment company structure of this fund and its share price returns outpacing net asset value (NAV) performance, as investor interest was captured by the Chinese market, which stood out as a bright light in an otherwise gloomy quarter for equities.
Other top-performing funds focused on the commodity markets, which have shown some good performance related to supply constraints and inflation protection. The WisdomTree Enhanced Cmdty ETF (LSE:WCOB)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 product built upon its outperformance in Q1 with a Q2 gain of just over 4.60% in sterling terms. Energy, where the fund has just under 40% exposure, was the main contributor. Similarly, the iShares Physical Gold ETC (LSE:SGLN) showed a small positive return in sterling terms. It aims to provide investors with exposure to the gold spot price through investment in responsibly sourced gold bars that meet the London Bullion Market Association’s rules, and has generally succeeded in producing performance in line with the LBMA Gold Price.
The final two top-performing funds showed marginally positive performance of 0.41% and 0.17% respectively. FTF ClearBridge Global Infrastructure Incomeinvests with an overall objective of generating an income in excess of inflation and has significant exposure to the utilities sector which performed relatively well, while Jupiter UK Special Situationsbenefited from its value approach and good stock picking to outperform the broader UK market.
The bottom five funds have a focus on smaller-cap companies and longer-duration growth stocks, reflecting investors’ preference for more defensive areas in this period of heightened uncertainty. Four of the five names are also investment companies, and, as such, their share price performance is reflective of investor sentiment as well as the NAV of their underlying holdings. With negative sentiment abounding, discounts to underlying NAV have widened over the quarter across all four investment companies, increasing the losses seen.
The Q1 woes of Scottish Mortgage (LSE:SMT)continued through Q2 with the trust losing 30.09% in share price terms. Investors punished the high valuations of the “blue sky” growth companies that this fund has always sought. These names require belief in high levels of growth over the longer term to justify their valuations and, at present, few investors have the confidence to take such views. Despite recent weakness, it should be remembered that this fund has shown exceptionally strong returns in more favourable market conditions and performance remains well ahead of benchmark over the past three years.
Baillie Gifford manages both Scottish Mortgage and the next worst-performing fund Baillie Gifford Shin Nippon (LSE:BGS), a smaller-cap Japan equity fund that returned -20.22%. All funds managed by this group have a growth bias to some degree and Shin Nippon, like Scottish Mortgage, is at the more extreme end of the growth spectrum. It also has an element of gearing (currently circa 15%) which exacerbates any performance weakness.
The remaining three funds were impacted by their market-cap exposure, as names down the market-cap scale continued to suffer compared to larger, more mature companies that offer a greater ability to withstand tougher economic conditions.
The concentrated emerging markets fund Mobius Investment Trust (LSE:MMIT)showed a disappointing return of -20.01%, with its focus on smaller-caps, Taiwan and IT all contributing negatively. Similarly, Henderson Smaller Companies (LSE:HSL)saw a loss of 19.04%, which reflects an element of gearing and the impact of the growth bias as well as the weakness at the lower end of the UK market.
The final fund is the only open-ended vehicle in the bottom five performers. Artemis US Smaller Companies did not therefore suffer from the effects of discount widening, but it was in one of the weaker areas of the global equity market. The return of -18.49% also reflects stock-selection issues across a number of sectors over this short period of time, however longer-term returns show success versus the benchmark.
Top five Super 60 funds in Q2 2022
| Performance (%) | Q2 2022 | 1 Year | 3 Years | 5 Years |
| Fidelity China Special Ord | 14.53 | -30.62 | 34.90 | 48.03 |
| WisdomTree Enhanced Cmdty ETF USD Acc | 4.60 | 46.51 | 65.16 | 72.34 |
| iShares Physical Gold ETC | 0.81 | 16.31 | 33.46 | 54.03 |
| FTF ClearBridge Global Infras Inc XInc | 0.41 | 24.45 | 41.17 | 64.67 |
| Jupiter UK Special Situations I Acc | 0.17 | 5.56 | 17.80 | 19.34 |
Source: Morningstar TR GBP.
Bottom five Super 60 funds in Q2 2022
| Performance (%) | Q2 2022 | 1 Year | 3 Years | 5 Years |
| Scottish Mortgage Ord | -30.09 | -46.06 | 36.11 | 82.89 |
| Baillie Gifford Shin Nippon Ord | -20.22 | -38.26 | -22.06 | 1.79 |
| Mobius Investment Trust Ord | -20.01 | -18.89 | 17.15 | 16.47 |
| Henderson Smaller Companies Ord | -19.04 | -33.61 | 0.83 | 18.57 |
| Artemis US Smaller Companies I Acc GBP | -18.49 | -19.79 | 18.04 | 59.25 |
Source: Morningstar TR GBP.
Top five Super 60 funds for a five-year period
| Performance (%) | Q2 2022 | 1 Year | 3 Years | 5 Years |
| The European Smaller Companies Trust PLC | -10.54 | -16.81 | 102.39 | 131.11 |
| JPMorgan Emerging Markets Ord | -7.89 | -20.63 | 24.49 | 117.12 |
| Scottish Mortgage Ord | -30.09 | -46.06 | 36.11 | 82.89 |
| Premier Miton US Opportunities B Acc | -11.14 | -2.66 | 38.93 | 73.50 |
| Vanguard U.S. Eq Idx £ Acc | -9.91 | -2.71 | 36.69 | 73.10 |
Source: Morningstar TR GBP.
Bottom five Super 60 funds for a five-year period
| Performance (%) | Q2 2022 | 1 Year | 3 Years | 5 Years |
| Vanguard UK Govt Bd Idx £ Acc | -8.70 | -15.59 | -11.48 | -4.96 |
| Balanced Commercial Property Ord | -2.49 | 28.26 | 13.48 | -4.68 |
| PIMCO GIS GlInGd Crdt Instl GBPH Acc | -7.55 | -15.87 | -10.26 | -4.04 |
| Lindsell Train Japanese Eq B GBP Qut Dis | -0.92 | -17.36 | -16.14 | -2.14 |
| Vanguard Glb Bd Idx £ H Acc | -5.17 | -10.78 | -6.40 | -0.68 |
Source: Morningstar TR GBP.
Most-bought Super 60 funds in Q2 2022
| Company name |
| Scottish Mortgage |
| Fundsmith Equity |
| City of London Ord |
| Vanguard LifeStrategy 80% Equity |
| F&C Investment Trust |
Most-sold Super 60 funds in Q2 2022
| Company name |
| Scottish Mortgage |
| Fundsmith Equity |
| City of London Ord |
| Vanguard LifeStrategy 80% Equity |
| iShares Physical Gold ETC |
Changes to the Super 60 list (under review/developments)
None in Q2
Super 60 videos in Q2
Vanguard LifeStrategy
Vanguard LifeStrategy: outlook for the next decade
Vanguard LifeStrategy funds: everything you need to know
Amati UK Smaller Companies
Three AIM stocks we own and two we have avoided
Profiting from ‘peak ESG’ and UK tech winners
BMO Sustainable Universal MAP Range
The UK shares we are buying that are sustainable winners
Why mining stocks have a place in this sustainable fund
Ninety One UK Alpha
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.