Introduction
There have been better alternatives than the UK stock market for dollar-based investors during the past few years.
Sluggish economic performance and protracted Brexit instability has led to underperformance against other equity markets, and a chaotic policy response to the Covid-19 pandemic has meant that recovery from the late-March nadir for risk assets has lagged other indices.
While the MSCI All Country World Index has bounced back vigorously from the February-March shock, and has a cumulative three-year return of 26.42% in US dollar terms, the FTSE All Share Index is still in the red, down 9.07%, according to FE Fundinfo.
The poor relative return is equally stark over a longer period. The UK benchmark is down 0.24% over five years and up an anemic 40.97%, compared with the broadly-based MSCI benchmark, which has risen 61.97% and 147.16% respectively, FE Fundinfo data shows.
Clearly, it’s been a tough decade for UK equity fund managers, but Darius McDermott, managing director of Chelsea Financial Services, compares for FSA a couple of products run by two of the best-regarded managers in the sector: the Merian UK Alpha Fund and the Schroder ISF UK Equity Fund.
| Merian | Schroders | |
| Size | $44m | $72m |
| Inception | 2013 | 2001 |
| Managers | Richard Buxton | Alex Breese |
| Three-year cumulative return | -14.08% | -27.96% |
| Three-year annualised return | -5.52% | -10.83% |
| Three-year annualised alpha | -4.18 | -4.81 |
| Three-year annualised volatility | 24.75% | 25.17% |
| Three-year information ratio | -0.57 | -1.09 |
| Morningstar star rating | *** | – |
| Morningstar analyst rating | Silver | – |
| FE Crown fund rating | * | * |
| OCF (clean share class) | 1.95% | 2.34% |
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