BMO Fund Watch Survey: 2.4% of funds manage consistent top-quartile gains over last decade

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Approximately 2.4% of funds have achieved consistent top-quartile gains over the last decade to the end of Q4 2019, according to BMO Global Asset Management (GAM)'s latest Fund Watch Survey, while a further 13.4% managed to generate above-average returns regularly over the time period.

The survey, which is a review of the 12 major market sectors, divided the decade into three consecutive 12-month periods, filtering out those that have consistently achieved above-average returns.

It found that, out of 1,090 funds included in the survey, 24 of them achieved consistent top-quartile returns on a rolling three-year basis. Q3 2014 recorded the highest number of funds achieving consistent top-quartile gains over this timeframe at 4.6%, while Q4 2018 saw the lowest number of vehicles reside in the top quartile for their returns at 0.5%.

On a sector basis, IA North America fared best on average, with eight out of 88 - or 9% - delivering regular top-quartile gains over the timeframe. Meanwhile, 21 out of 88 - or 23.9% of funds in the sector - managed above-average returns over the last decade.

In contrast, not a single Asia Pacific or Strategic Bond fund delivered consistent top-quartile returns, although approximately 10% of both Asia Pacific and Strategic Bond funds delivered consistent above-average gains over ten years. It was funds in the IA UK Smaller Companies sector that struggled most to achieve above-average returns, according to the survey, with four out of 48 vehicles passing through BMO MM's Consistency Ratio filter.

Kelly Prior, investment manager in BMO Global Asset Management's Multi-Manager team, said: "The past decade has been unusual in investment terms. There is always something to worry about, but it is clear that central bank action has dictated market sentiment and been a hugely influential force.

"The factors that have driven markets for the last decade are unlikely to have the same impact going forward, potentially leading to a change in the guard where fiscal spending overshadows monetary policy."

The team added: "Reading through these historic musings the key stand-out is there is always something to worry about - but also an opportunity if you are prepared to look for it."


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