Fund performance league tables

retrea

I’m trying to understand insurance bonds and performance comparisons. I’ve put £70,000 into a Halifax Managed Income fund. I’ve found a website called Trustnet.com which gives league tables of funds. My Halifax Managed Income fund comes in at 431 out of a table of 454 funds in something called the Balanced Managed sector – positions based on performance over the last year. The league table shows the top fund – AXA WF Optimal Income– growing by 11.9% over the year, while the Halifax Managed Income Fund fell by 10.9%. The asset allocation for the Halifax Managed Income Fund is mainly UK equities and UK Fixed Interest assets, whereas the AXA WF Optical Income fund consists of international equities and International Fixed Interest assets.
My question: Is it fair to include the two funds in the same sector league table as their asset allocations are markedly different?

Lokolo

For this league table yes.

You could make your own league table based on different sectors like UK Zero, UK Small etc.etc. but obviously this is a bit of effort.

If you really want to look at how funds are doing in that sector, go around collecting the data, put it in excel, and see how its doing. Obiovusly then it maybe a bit higher, but even so, a lot of people want to pick funds on best performance, not caring where they invest as long as they get best return, so they put everyone together.

dunstonh

My question: Is it fair to include the two funds in the same sector league table as their asset allocations are markedly different?

No. They have different sector allocations so will perform differently at different times. Also, are you comparing the Unit trust fund to the AXA life fund?

Do take past performance with a pinch of salt. If you are looking for future potential then you often have to look at the funds at the bottom of the league tables and looking for value rather than those that have had a good run already.

Lokolo

How do you determine if they have value without past performances..?

Graeme7777

Hi,

Many of the sector tables seem to contain funds that are not directly comparable. A good example is the UK All Companies sector that contains funds with sometimes very different objectives - e.g. funds focused on, say, 30 best idea stocks and funds that track the performance of a broad index like the FTSE All Share. So you should probably make comparisons within a sector with caution.

Also, looking at a snapshot of peformance (e.g. 1, 3 and 5 years to 31/12/2007) may not give you enough information to assess how good the fund manager is. You may want to look at how the fund has performed in both up and down markets.

Hope this is of some help.