Over 2012, the top-performing fund was Standard Life UK Equity Unconstrained (GB00B0LD3B90), with a return of 44.14 per cent. While you can't judge a fund over one year, this success this is no flash in the pan: it is top fund in the UK All Companies sector over one and five years, and ninth over three years out of more than 250 funds.
- Strong total returns
- Performs throughout the cycle
- Well-resourced investment team
- Relatively high TER
Strong performance is useful as in an uncertain environment and a way to get round this is through successful stock-picking. The UK Equity Unconstrained Fund is a concentrated portfolio of the best ideas generated by Standard Life Investments' UK equities team, led by fund manager Ed Legget. Standard Life favours a team approach actively sharing ideas across asset classes, business areas and geographic regions.
The fund can invest in UK shares of any size or sector, building a portfolio of the team's most favoured equities, appropriately diversified. Standard Life says this means the fund can respond quickly to a volatile investment environment to reflect changing market conditions and take advantage of any stock opportunities as they arise, looking to outperform throughout the economic cycle. At present the fund has nearly 55 per cent of its assets in mid caps.
| IC TIP RATING | |
|---|---|
| Tip style: | GROWTH |
| Risk rating: | HIGH |
| Timescale: | LONG TERM |
Its performance is monitored against the FTSE 350 Equally Weighted Index (ex Investment Trusts) which has outperformed the broader UK market by about 5 per cent on an annualised basis since 2005. In the FTSE 350 Equally Weighted Index each stock has the same weighting creating a proxy for the average stock in the UK market. Since its launch the fund has outperformed this index, as well as the FTSE All-Share.
The fund's investment team favour shares stocks that are underappreciated by the market and have the potential for good long-term returns. To identify shares where they believe the consensus opinion is wrong, they use indicators including company visits, quantitative research and traditional valuation measures. Their analysis looks at facts such as what is driving a company, what is changing and what is priced in, as well as considering whether the market will change view and what will make it do this.
The fund has a relatively high level of volatility - Standard Life itself ranks the fund at its highest level of '7' explaining that the higher the volatility rating, the greater the potential investment returns over the longer term. But high volatility funds can suddenly fall and rise in value: for example, while the fund gained 44.14 per cent in 2012, in 2011 it lost more than 20 per cent, though over time it makes good strong returns. The fund has some exposure to smaller companies (9.2 per cent) and that fact it is a relatively concentrated portfolio of around only 50 shares can add to volatility. For this reason, it is better for long-term investors, and the fund's aim is long-term growth.
The fund also has a higher than average total expense ratio (TER) of 1.9 per cent (UK equities funds typically have a TER of around 1.6 per cent). However, the fund's strong outperformance of its peers with strong positive returns, means it is still a buy.
Also read our profile of the fund
Standard Life UK Equity Unconstrained Acc (GB00B0LD3B90) | |||
| PRICE: | 145p | MEAN RETURN: | 20.70% |
| IMA SECTOR: | UK All Companies | STANDARD DEVIATION: | 26.57% |
| FUND TYPE: | Open-ended investment company | 1-YEAR PERFORMANCE: | 45.77% |
| FUND SIZE: | £463.8m | 3-YEAR PERFORMANCE: | 57.27% |
| No OF HOLDINGS: | 50* | 5-YEAR PERFORMANCE: | 99.3% |
| SET-UP DATE: | 29 September 2005 | TOTAL EXPENSE RATIO: | 1.90% |
| MANAGER START DATE: | 18 April 2008 | MINIMUM INVESTMENT: | £1,000 |
| YIELD: | 0.96% | MORE DETAILS: | standardlifeinvestments.co.uk |
Source: Morningstar & *Standard Life Investments
Performance data as at 7 January 2013
Top 10 holdings as at 30 November 2012
| Smith (DS) | 5.0 |
| International Personal Finance | 4.8 |
| Lloyds Banking | 4.2 |
| Bodycote | 4.2 |
| Barclays | 4.0 |
| Howden Joinery | 3.6 |
| Yule Catto | 3.6 |
| GKN | 3.4 |
| Afren | 3.2 |
| easyJet | 3.2 |
Sector breakdown
| Industrials | 38.7 |
| Financials | 19.7 |
| Consumer services | 13.8 |
| Basic materials | 10.0 |
| Oil & gas | 5.80 |
| Consumer goods | 5.70 |
| Technology | 3.20 |
| Telecommunications | 2.50 |
| Cash and other | 0.60 |
