By Maike Currie, 24 January 2011
UK-focused funds made an impressive comeback last year, making up nearly half of the top 100 performing unit trusts in 2010, according to sister publication Money Management's annual review of the best performing unit trusts.
Highlighting the best performing funds and the themes that came to define 2010, the research found that seven of the best performing 10 funds over 2010 were gold or natural resources funds. The top spot belonging to the SF t1ps Smaller Companies Gold Fund, run by boutique asset manager t1ps Investment Management.
Propelled forward by the spectacular rise in the gold price the fund, which was set up in September 2009, returned 123 per cent on an initial £1,000 invested in the 2010 calendar year.
That's four times the rise in the price of gold, which peaked at $1,430 an ounce in December. Five years ago, gold was hovering at around $520 an ounce.
Ani Markova, manager of the Smith & Williamson Global Gold and Resources fund, which generated the third highest returns overall in 2010, says that as governments continue to print money to solve their balance sheet problems, gold will carry on benefiting and is in a position to become the benchmark currency for preserving value.
Interestingly, unit trusts focused on smaller companies represented 40 of the 100 best performing funds in 2010, compared to just 13 in the previous year. Of these, funds focused on UK markets performed best with 28 of the smaller companies funds within the top 100 sitting in the UK smaller companies sector, making it the biggest single sector overall.
Unit trusts investing in the UK made a significant comeback in 2010 with nearly half - 46 - of the top 100 funds in 2010 focused on the UK markets.
Also assessing the top 100 funds over a five year period ending in 2010, Money Management found two emerging markets providing consistent performance; the Baring Hong Kong China Fund and Fidelity's FF China Focus Fund. The former was placed third and second in 2009 and 2010 respectively, while the latter has seen steady improvement from fifth place to third between 2008 and 2010. The top performer over the five year period, however, was the Smith & Williamson Global Gold and Resources Fund, which generated returns of £3,409 on the back of top-quartile returns of 74 per cent and 66 per cent in 2009 and 2010, respectively. The fund requires an initial minimum investment of £5,000.
Top five unit trusts over five years to 2010
Source: Money Management
Notes: Funds are ranked according to their cumulative performance over the five years to 2010, based on a £1,000 initial investment. All figures are bid-bid, growth income reinvested.
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