UK smaller companies the best performing sector of 2013. Fixed interest and commodities among the worst

2nd January 2014


The UK smaller companies sector was the best performing of 2013 with bond and commodities sectors dominating the worst performing sectors.

The best performing fund was the Axa Framlington Biotech fund returning 63.65% while the junior gold fund fell 65.85%.

Overall the FTSE 100 Index rises 14.4% in 2013, although this rises to 18.7% when reinvested dividends are taken into account.

Top performing funds of 2013 

Name IMA % Rank
AXA Framlington Biotech Specialist 63.65 1
Legg Mason Japan Equity Japan 63.65 2
Legg Mason Capital Management Opportunity North America 62.01 3
Invesco Perpetual Japanese Smaller Companies Japanese Smaller Companies 61.56 4
River and Mercantile UK Equity Smaller Companies UK Smaller Companies 59.62 5
River and Mercantile UK Equity Long Term Recovery UK All Companies 57.59 6
Unicorn UK Smaller Companies UK Smaller Companies 56.54 7
CF Miton UK Smaller Companies UK Smaller Companies 56.17 8
Baillie Gifford Global Discovery Global 55.76 9
MFM Techinvest Technology Technology & Telecoms 55.04 10

Bottom performing funds of 2013

Name IMA % Rank
Junior Gold Ret Specialist -65.85 1
CF Ruffer Baker Steel Gold Specialist -60.85 2
WAY Charteris Gold Portfolio Specialist -54.23 3
SF T1ps Smaller Companies Gold Specialist -49.34 4
BlackRock Gold & General Specialist -47.88 5
Smith & Williamson Global Gold & Resources Specialist -45.38 6
Investec Global Gold Specialist -44.60 7
Thesis Australian Natural Resources Specialist -29.40 8
JPM Turkey Equity Specialist -21.48 9
JPM Natural Resources Specialist -20.00 10

Top performing sectors in 2013 

Name % Rank
IMA UK Smaller Companies 37.34 1
IMA Japanese Smaller Companies 36.69 2
IMA North American Smaller Companies 35.87 3
IMA North America 31.38 4
IMA European Smaller Companies 30.57 5
IMA Technology & Telecoms 27.69 6
IMA UK All Companies 26.13 7
IMA Japan 26.10 8
IMA Europe Excluding UK 25.97 9
IMA Europe Including UK 25.31 10

Bottom performing sectors in 2013 

Name % Rank
IMA Global Emerging Markets Bond -9.69 1
IMA UK Gilt -5.28 2
IMA Global Emerging Markets -4.19 3
IMA Global Bonds -2.53 4
IMA UK Index Linked Gilt 0.02 5
IMA Short Term Money Market 0.07 6
IMA £ Corporate Bond 0.21 7
IMA Money Market 0.28 8
IMA Specialist 0.47 9
IMA Asia Pacific Excluding Japan 2.12 10

Source: LIPPER 31st December 2012 to 31st December 2013

Richard Troue, Head of VCT Research at Hargreaves Lansdown, says: “Overall 2013 was a good year for investors. Economic recovery has continued, both in the UK and across other developed economies. Most major stock markets have made solid gains, but smaller companies have stolen the show. If this pattern of recovery continues, with consumer, business and investor confidence improving, we see no reason why smaller companies can’t continue to perform well in 2014.

“While the developed markets of the UK, US, Europe and Japan made good ground, emerging markets lagged. Concerns over slowing growth and the knock-on effects of the US tapering (slowing) its quantitative easing programme weighed on investors’ minds, affecting equity and fixed interest markets. Investors should be well served by having exposure to emerging economies over the long term, but while equity valuations now look attractive, particularly the Chinese, Russian and Latin American markets, further short-term setbacks cannot be ruled out and investors considering dipping a toe back in might want to phase money into the market slowly.”

“Falling commodities prices and escalating production costs have contributed to the poor performance of mining and resources companies, with gold mining funds dominating the bottom performers. Again, valuations are starting to look attractive, but momentum remains negative. A good contrarian long-term play, but catching the falling knife requires some bravery.


“As investors sought riskier assets in 2013 fixed-interest investments performed less well, with the fixed-interest sectors among the worst performing. We now see less value available in government debt, investment grade debt, high yield bonds and emerging market debt. In this environment we favour strategic bond funds where managers have more flexibility to identify attractive opportunities.”

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