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26 May 2010

Investment company outperformers of the decade

Emerging markets investment companies dominate the consistent outperformers of the decade

The markets are looking volatile once again and, with a potentially rocky journey ahead, the Association of Investment Companies (AIC) has identified the 20 investment companies with the most consistent performance record over the last decade (see table 1).  The five most consistent performers over the last ten years have been BlackRock World Mining, followed by Fidelity European Values, HG Capital, Invesco Perpetual UK Smaller Companies and British Empire Securities & General. 

The top 20 most consistently performing investment companies represented 12 different AIC sectors. Emerging Markets demonstrated their recent dominance, with 10 of the top 20 companies coming from this region. The most represented individual sector was Asia Pacific – Excluding Japan with 4 investment companies, followed by Global Emerging Markets and UK Smaller Companies with 3 companies from each sector in the list. There were 2 European Emerging Markets companies amongst the consistent outperformers.

Methodology
In order to calculate these figures, the AIC looked at the industry’s discrete annual returns every year for ten years.  Each year the company’s performance was benchmarked against the overall average performance of the investment company industry and the companies that most consistently outperformed on an annual basis were identified.  Where two companies had the same consistency score, the volatility of the returns (standard deviation) was used to differentiate between them. 

10 Year Performance
The Association also compared the 10 year share price performance figures (see table 3) with the results for the 20 most consistent outperforming investment companies (see table 1).  Interestingly, BlackRock World Mining was top of the class on performance as well as consistency with £100 growing into an impressive £911 over 10 years.  However, the second best performer over ten years was Scottish Oriental Smaller Companies (16th on consistency) where £100 grew to £684, and the third best performer was Baring Emerging Europe (18th on consistency) where £100 over the last decade grew to £609. The best share price performances over ten years did not necessarily correlate with the most consistent year on year performance.

Annabel Brodie-Smith, Communications Director, AIC said:  “We looked at consistency of performance across the industry to see if there are any important lessons as past performance tables are usually dominated by one or two sectors. In many cases looking at consistency – discrete performance each year – gives a different result from just looking at past performance.  At times of market uncertainty like now, it’s interesting to look at discrete performance to see how companies have performed through different market conditions.

“Traditional past performance is clearly an important criteria when considering an investment but looking at discrete performance gives you a better understanding of a potential investment.  Of course there’s no guarantee that good and consistent past performance will continue into the future but it’s worth doing your research thoroughly before making an investment.  It’s also important to consider a range of criteria such as the objective of the company, its investment risk, its major holdings, discount and charges before you decide to invest.”

Evy Hambro, Manager of BlackRock World Mining said: “It is a great honour for BlackRock World Mining Trust to be recognised as one of the most consistent performing investment trusts.

“Today we are seeing growing demand from emerging nations and recovering demand from developed economies for copper, iron ore and coking coal.  Supply of these commodities remains constrained by a mix of geological factors, infrastructure challenges and more recently cautious reinvestment of capital into new production capacity.  Add to this the ‘China effect’ which has seen both demand from China expand more rapidly than expected and it has switched from being a net exporter to a net importer of some commodities. The combination of these factors has resulted in commodity prices recovering rapidly from the low levels seen in 2008.”

 

20 Most Consistent Performing Investment Companies Over 10 Years

	Fund	Sector
1	BlackRock World Mining	Sector Specialist: Commodities and Natural Resources
2	Fidelity European Values	Europe
3	HgCapital	Private Equity
4	Invesco Perpetual UK Smaller Companies	UK Smaller Companies
5	British Empire Securities & General	Global Growth
6	Aberdeen Asian Smaller Companies	Asia Pacific - Excluding Japan
7	Montanaro UK Smaller Companies	UK Smaller Companies
8	TR Property	Property Securities
9	Pacific Horizon	Asia Pacific - Excluding Japan
10	Gartmore Fledgling	UK Smaller Companies
11	Genesis Emerging Markets	Global Emerging Markets
12	BlackRock Latin American	Latin America
13	Templeton Emerging Markets	Global Emerging Markets
14	Aberdeen New Dawn	Asia Pacific - Excluding Japan
15	JPMorgan Emerging Markets	Global Emerging Markets
16	Scottish Oriental Smaller Companies	Asia Pacific - Excluding Japan
17	Eastern European	European Emerging Markets
18	Baring Emerging Europe	European Emerging Markets
19	Gartmore Irish Growth	Country Specialists: Europe
20	Small Companies Dividend	UK High Income

View the performance data for the most consistently outperforming investment companies here.

- Ends -

Notes to Editors

1. Performance figures are to 30 April 2010 and are mid market share price with net income reinvested and a 3.5% deduction for charges, stamp duty and market spread. Sector average performance figures include non AIC Members but exclude VCTs.  Source: AIC using Morningstar. 

2. The Association of Investment Companies was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed ended investment companies, incorporating investment trusts and other closed ended investment companies and VCTs.  The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help Members add value for shareholders over the longer term. The AIC has 345 members and the industry has total assets of approximately £89.6 billion.

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