Investors Chronicle - 2012 fund tips: how we have done so far

The Big Theme

Over the course of 2012 we tipped more than 40 funds, investment trusts and exchange traded funds (ETFs). Many of them were intended to be long-term investments, their true performance will only be apparent around five years down the line. However, we have had a look at the numbers to see how our funds are doing so far, and already a number of them have turned in good numbers. Funds tipped earlier in the year of course have an advantage over ones done in the past few weeks, but even so there are still some impressive numbers over a short space of time.

Since around the start of the year (our data runs from 3 January) to 31 December 2012, 13 of the investment trusts we tipped beat both the returns of the FTSE 100 and FTSE All-Share, while eight out of the 22 unit trusts and open-ended investment companies (Oeics) also achieved this.

Returns given in the tables below are from around four days after the Friday we published the tip (with the exception of HICL C share for which the data runs from around the time of launch) - perhaps at around the time you bought the fund after reading Investors Chronicle over the weekend and considering your options.

The top result comes from maybe a surprising choice given economic and market conditions, and the state of the world - a UK-focused fund. On further inspection, however, it is no surprise that Unicorn UK Income (GB00B00Z1S94) has led the pack with a 20.73 per cent total return between April and the end of the year, almost three times as much as what the FTSE All-Share and the FTSE 100 made over the same period. The fund is consistently the top UK equity income fund, and at present tops its sector over one, three and five years. It focuses on income which can hold up even in choppy markets, but unlike many of its peers, has more than 90 per cent of its assets in smaller companies, which, if picked correctly, offer far better growth than larger companies, in particular the high-yielding blue-chip stalwarts. Many of its holdings also tend to generate most of their revenues via overseas growth, in particular from fast-growing economies in the Far East and China, so UK economic problems are not a big problem for the fund. Read the tip

Funds tipped

Fund and performance period from tip to end of year	Total return (%)
L&G US Index R Acc 17/01/12 to 31/12/12	4.60
Neptune Global Equity A Acc 24/01/12 to 31/12/12	-6.04
JPM Strategic Bond A Net Inc 7/02/12 to 31/12/12	3.89
Newton Real Return A 3/04/12 to 31/12/12	2.45
Unicorn UK Income A 10/04/12 to 31/12/12	20.73
Investec Global Energy A Acc Net GBP 17/04/12 to 31/12/12	-2.77
GLG Technology Equity Retail 29/05/12 to 31/12/12	4.42
Marlborough UK Micro Cap 5/06/12 to 31/12/12	13.56
AXA Framlington American Growth Acc 19/06/12 to 31/12/12	-2.91
Invesco Perpetual Global Equity Income Inc 3/07/12 to 31/12/12	5.69
JOHCM UK Opportunities B GBP Acc 31/07/12 to 31/12/12	1.92
Threadneedle UK Equity Income Ret Net GBP 14/08/12 to 31/12/12	3.84
Jupiter Strategic Bond Inc 21/08/12 to 31/12/12	5.45
Newton Global Higher Income Inc 4/09/12 to 31/12/12	0.38
Fidelity MoneyBuilder Dividend 18/09/12 to 31/12/12	0.42
AXA Framlington UK Select Opps R Acc 25/09/12 to 31/12/12	0.27
Threadneedle Europe Select Ret Net GBP 9/10/12 to 31/12/12	1.96
Cazenove UK Opportunities B 30/10/12 to 31/12/12	7.08
Jupiter Japan Income Inc 13/11/12 to 31/12/12	6.16
Liontrust Special Situations Inc 27/11/12 to 31/12/12	0.52
Aberdeen Emerging Markets A Acc 18/12/12 to 31/12/12	1.90
Schroder Tokyo Acc 25/12/12 to 31/12/12	-0.67

Source: Morningstar

The next best performer from our 2012 tips was an investment trust that also has an eye to income and the East - Schroder Oriental Income (SOI) with a share price total return of 17.5 per cent between mid-February and the end of the year, far ahead of the FTSE All-Share and FTSE 100, which respectively returned 5 per cent and 3.67 per cent over the same period. Our reasons for backing the trust included a small premium to net asset value (NAV) at the time of tipping it (some of its high-yielding peers trade at high premiums), a diversified portfolio and 7 per cent a year dividend growth since launch. The trust also beats the MSCI AC Pacific ex-Japan Index, over one, three and five years. Read the tip

Investment trusts tipped in 2012 take the lead, with six making double-digit returns as opposed to only two open-ended funds. These trusts include City Merchants High Yield (CMHY), which returned 15 per cent between our tipping it and the end of 2012. We suggested this trust because of its high yield (currently 6 per cent) and it can still be obtained at a discount to NAV. Read the tip

BlackRock Smaller Companies (BRSC), Scottish American (SCAM), HICL C share and Jupiter European Opportunities (JEO) also made double-digit returns since we tipped them.

BlackRock Smaller Companies also beats both the FTSE All-Share and FTSE 100 since we tipped it, as does Jupiter European Opportunities (JEO), proving that good returns can still be made in Europe. We tipped this Europe fund because it provides access to world-leading companies that happen to be listed on the continent, and because of its excellent performance due to the strong stock-picking skills of manager Alex Darwall. This trust is ahead of all its Europe sector peers over one, three and five years with strong positive returns, over the longer periods by a considerable margin. It is also well ahead of its benchmark, FTSE World Europe ex UK, over those periods.

In addition, when we tipped the trust it was on a discount of more than 7 per cent, whereas today it trades at a premium of around 1.9 per cent. Read the tip

Henderson Far East Income (HFEL) was a sell tip, but between our note and the end of the year made 11.28 per cent. This is not as good as sector peer Schroder Oriental Income, hence the sell tip. But as mentioned in the article (read it here), if you have a large enough portfolio it could be worth holding this and the Schroder trust, as well as sector leader Aberdeen Asian Income (AAIF).

Our other sell note Phaunos Timber (PTF) lost a further 4.58 per cent between the time we issued our sell note in May and the end of the year, so it would have paid to get out sooner rather than later with this fund. Read the tip

Trusts and ETFs tipped

Fund	Return (cumulative)
New India ord 31/01/12 to 31/12/12	2.48
Schroder Oriental Income ord 14/02/12 to 31/12/12	17.50
Picton Property Income ord 21/02/12 to 31/12/12	-11.42
Herald Investment Trust 28/02/12 to 31/12/12	1.80
HICL C share 26/03/12 to 31/12/12	11.1*
BlackRock World Mining Trust ord 20/03/12 to 31/12/12	-14.61
JPMorgan US Smaller Companies ord 24/04/12 to 31/12/12	5.31
BlackRock Smaller Companies ord 15/05/12 to 31/12/12	12.39
Phaunos Timber ord 22/05/12 to 31/12/12	-4.58
Scottish American ord 12/06/12 to 31/12/12	10.00
Henderson Far East Income ord 10/07/12 to 31/12/12	11.28
Jupiter European Opportunities ord 17/07/12 to 31/12/12	11.93
City Merchants High Yield ord 24/07/12 to 31/12/12	15.09
North American Income Trust ord 7/08/12 to 31/12/12	-2.50
Henderson Smaller Companies ord 11/09/12 to 31/12/12	8.29
Middlefield Canadian Income ord 2/10/12 to 31/12/12	-2.78
Qatar Investment Fund ord 16/10/12 to 31/12/12	-1.38
iShares MSCI Europe (IE) 23/10/12 to 31/12/12	1.71
Edinburgh Dragon ord 6/11/12 to 31/12/12	3.61
Fidelity Special Values ord 20/11/12 to 31/12/12	6.04
Standard Life Equity Income ord 4/12/12 to 31/12/12	1.15
Edinburgh Worldwide ord 11/12/12 to 31/12/12	0.71

Source: Morningstar

Stand-out open-ended funds included Marlborough UK Micro Cap (GB00B02TPH60), which returned 13.56 per cent between early June and the end of the year. We tipped this fund because of its top returns over longer periods, and reasonable total expense ratio of 1.52 per cent relative to many other smaller companies funds that charge more. This fund also includes access to Alternative Investment Market shares, which is not the case with all smaller companies funds. Read the tip

Another good return came from Cazenove UK Opportunities (GB0031092728) with a 7 per cent return. Although lower, this is only for the last two months of the year. Its total return for calendar year 2012 was an outstanding 33.3 per cent, while the fund is in the top 10 performing UK All Companies funds over one, three and five years. We tipped it for reasons including its excellent benchmark-beating returns and investment approach whereby it tries to perform throughout the business cycle, which it succeeds in doing. Read the tip

See next week's issue for our interview with Julie Dean, manager at Cazenove UK Opportunities Fund.

2012 fund tips: how we have done so far

The Big Theme

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