A decade ago, Brits were digesting the news that Northern Rock, a high-street bank had collapsed. It was the first UK bank to fail in more than 100 years, but one year later, Royal Bank of Scotland and Lloyds followed suit, having to be bailed out by the Government to the tune of £500 billion.
Financial stocks plummeted in value, with RBS shares losing 67% in value in a single day the following January when it admitted it had suffered the biggest corporate losses in history – £28 billion for the 2008 calendar year.
During the global financial crisis – or credit crunch as it became known, it wasn’t just financial stocks which saw rock bottom prices. 2008 marked the FTSE 100’s worst year on record, losing 31% over the year, a trough of 3,830. It is 7,268 today. Nor was it just the UK stock market which suffered considerable losses. The Hang Seng ended 2008 48% lower, the Nikkei lost 42% while the S&P 500 fell 34%.
The years that followed saw markets recover, but not all investors clawed back their losses. It takes a potent mix of capital preservation and clever stock picking to have emerged as the best performing fund managers over the past 10 years. Losing 50% of value in 2008 meant many investors had to make 100% gains the following year to break even. Here are the top 10 funds, based on annualised total returns over the past decade. One theme clearly dominates, and those investors who took a brave punt on this niche sector have been rewarded. Remember, past performance is no guarantee of future returns.
Candriam Equities L Biotechnology Class
10 Year Annualised Return: 22%
Qualitative in-depth research on clinical data is the core of this well-designed process. The analysis starts with a preliminary screening to study themes and trends within the biotech sector. The portfolio has changed over time, moving from a concentrated, small-cap-biased fund to a diversified offering. The small- and mid-cap tilt is still intact, as the team wants exposure to the industry’s innovation.
UBS (Lux) Equity Fund - Biotech
10 Year Annualised Return: 19%
This fund invests mainly in equities and other equity shares of companies focusing on research, product development, product manufacture and distribution in the biotechnology industry and related branches.
Franklin Biotechnology Discovery Fund
10 Year Annualised Return: 19%
The fund’s investment objective is capital appreciation. The fund invests principally in equity securities of biotechnology companies and discovery research firms, including small to mid-sized companies, located in the US.
Legg Mason IF Japan Equity
10 Year Annualised Return: 19%
The fund seeks to achieve capital growth through investment in securities of Japanese companies.
AXA Framlington Biotech Fund
10 Year Annualised Return: 18%
The objective is to provide long-term capital appreciation by investing principally in equity securities of companies in biotechnology, genomic and medical research industries worldwide.
Wellington Global Health Care Equity
10 Year Annualised Return: 17%
The fund seeks long-term returns by investing primarily in the equity securities of health care companies worldwide.
Janus Global Life Sciences Fund
10 Year Annualised Return: 16%
The fund invests in life science equity securities of companies located anywhere in the world and selected for their growth potential.
Vanguard US Opportunities
10 Year Annualised Return: 16%
This actively managed fund seeks to provide long-term capital growth by investing in U.S. stocks with above-average earnings growth potential that is not reflected in current market prices.
JPM Global Healthcare
10 Year Annualised Return: 16%
The fund aims to deliver positive total returns in any three year period from a flexibly managed portfolio of global assets.
Old Mutual Smaller Companies Focus
10 Year Annualised Return: 16%
Manager Nick Williamson follows the team approach, which blends top-down with bottom-up analysis. A minimum of 80% of the fund's portfolio should be invested in constituents of the Numis Smaller Companies Index, the bottom 10% of the U.K. market by market cap.
The manager looks for companies that have the potential to be re-rated, those that show sustainable above-average earnings growth, and those likely to show positive earnings revisions.
