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5 best and worst performing equity funds of FY2018

Emma Rapaport  |  24 Jul 2018Text size  Decrease  Increase  |  
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best performing managed funds

Big bets on Flight Centre (ASX: FLT) and Reliance Worldwide (ASX: RWC) paid off for one Australian fund manager, while overweight positions on Telstra (ASX: TLS) hurt others, according to the latest Morningstar data.

Of the funds rated by Morningstar analysts, Bennelong's silver rated Australian Equities Fund was the top returning fund in the Australian Equities Large Cap category for financial year 2018, returning 26.31 per cent for investors.

Overseen by seasoned portfolio manager Mark East, the fund outperformed the S&P/ASX 200 index by 7.36 per cent in 2017, and 11.64 in the six months to 30 June 2018. This was helped by strong positions in global biotech company CSL Limited (ASX: CSL), whose share price leapt almost 40 per cent, plumbing manufacturer Reliance Worldwide Corporation (ASX: RWC), up over 50 per cent, and travel retailer Flight Centre Australia (ASX: FLT).

Bennelong was significantly underweight financial services stocks (11.3 per cent) relative to the index which allocated 34.35 per cent to the sector.

"Bennelong Australian Equity’s persistent ability to build high-conviction portfolios with exposure to favoured market themes continues to impress," Morningstar analyst Matthew Wilkinson says.

"The firm’s research is an edge and notably has redirected the portfolio in 2012 by cutting exposure to mining services, increasing holdings in yield proxies in 2015 and sharply increasing materials exposure in mid-2016. Identifying such market trends requires adept timing – an uncommon ability, but one the team is building a strong track record of."

The Platypus Australian Equities fund, managed by Prasad Patkar, took out second place, returning 25.92 per cent in the year to 30 June 2018.

The worst performing fund in the Morningstar rated Australian Equities Large Cap category, Vanguard Australian Shares High Yield, delivered 2.50 per cent to investors.

"Poorly timed buys into materials such as BHP and Rio Tinto hurt in 2016," Morningstar analyst Anshula Venkataraman says. "Vanguard recouped some of these losses in 2017, though this was curtailed as exposure to Telstra took a bite out of returns."

Morningstar Rated Funds | Australian Equity Large Cap

large cap aussie equities performance table

*Note: Total Return 1 Year accounts for management, administrative and 12b-1 fees and other costs taken out of fund assets.

Mid/small Cap managers

Focusing on companies that fall outside the S&P/ASX 100 index proved a successful strategy for investors over the last financial year. The top performing fund in the Morningstar-rated Australian Equity Mid/Small Cap category returned 32.93 per cent over this period.

Despite a poor showing in 2016, bronze-rated Eley Griffith Group Small Companies stormed back in financial year 2018, with a well-timed bet on online payments company AfterPay Touch Group (ASX: APT), whose share price skyrocketed 246 per cent in the 12 months to 30 June 2018, and mineral exploration company Saracen Mineral Holdings (ASX: SAR).

The fund underperformed the S&P/ASX Small Ordinaries index by more than 3 per cent in 2017, but caught up in the last six months, outperforming by 5.14 per cent.

"Eley's investment process remains pleasingly consistent, delivering a diversified portfolio of 35-55 thoroughly researched names," says Alex Prineas, Morningstar's associate director, manager research.

"The experienced team hunts for stocks they believe are quality business models, which makes good sense in the often flighty small-cap space. There is a well-structured fee, but the all-in costs do make it a touch more expensive than peers."

Bronze rated Colonial First State Wholesale Future Leaders fund, managed by Tim Canham and Wik Farwerck, was the runner-up, returning 31.95 per cent in the year to 30 June 2018.

The worst performing fund in this category was Australian Ethical Australian Shares, which delivered a respectable 8.03 to investors.

"From a sector perspective, underweights to consumer discretionary and overweights to healthcare heled the portfolio's performance," Morningstar analyst Kunal Kotwal says. "However, underweights in consumer staples and industries, and overweight positions in financials, considerably hurt returns."

Morningstar Rated Funds |  Australian Equity Mid/Small Cap

mid small cap aussie equities performance table

*Note: Total Return 1 Year accounts for management, administrative and 12b-1 fees and other costs taken out of fund assets.

 

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Emma Rapaport is a reporter for Morningstar Australia

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication

is an editor for Morningstar.com.au

© 2020 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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