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The Bulls and Bears of 2021

Date: 10 January 2022

As we all head back to our home office desks and the start of another year, this week in the Fund Buyer we take a look back at some of the highlights and lowlights in the fund world in 2021.

Let me start by wishing you a happy and prosperous New Year! Today, I thought it was an opportune time to look back and consider some of the highlights and lowlights from last year, with a summary of some of the key statistics.

I’ve talked about active vs passive in a number of these podcasts, but the scorecard for 2021 for the IA peer group shows a mixed bag as of year-end. Using the IA regional equity peer groups, Emerging Markets and Asia are where active managers have done best in the last 12 months, with Asia the standout, however other regions have lagged. Global equity managers, in particular, have had another tough year, with the peer group average up just under 17%, over 5% behind MSCI World. No doubt the weighting in the US will have had an impact on many within that space. On a more positive note, for active managers, over three years the picture remains much better, with all but Global and US active managers well ahead of their relevant indices.

Moving on to the investment trust and fund winners and losers. 2021 was a year dominated by the reopening of the global economy as a result of the successful vaccine rollout, followed swiftly by the emergence of new variants and reminders that the Covid-19 pandemic is a long way from being resolved. However, in the investment universe this didn’t stop asset prices continuing to rise, with long-term trends continuing to play out. No more was this the case than in the investment trust market, where private equity dominated the performance tables following strong growth in the previous 12 months. This included Baillie Gifford’s Schiehallion, NB Private Equity, BMO Private Equity, Riverstone Energy and Standard Life Private Equity.

We also saw a number of specialist vehicles, including Vietnam Holding and Ashoka India, both focused on the individual Emerging nations, which managed to withstand the contagion risk spreading from China in the form of the Evergrande defaults and economic and regulatory tightening. Also, in the top ten was Tufton Oceanic Assets, which invests in shipping vessels.

Comparing the winners within the trust world versus open-ended, which I’ll come on to, two things jump out.

The winners in the trust space include a significant number of illiquid assets, highlighting the benefit of the structure, and investments that largely cannot be held comfortably within the open-ended space. It is also noticeable that the investment trust winners were some ways ahead of those within the open-ended world, at least considering the top 10, highlighting the opportunities out there for investors who are a little more investment structure agnostic, or consider trusts to be beneficial to access some areas of the market.

At the bottom of the performance pile this year, China dominated, with three trusts investing in China among the weakest 10. There were also two Biotech focused trusts, with that area of the market having struggled as a whole. Another notable trend among the weakest trusts was that there were three Baillie Gifford trusts among the group, namely Baillie Gifford China Growth, Edinburgh Worldwide, the global smaller companies trust, and Baillie Gifford Shin Nippon, which invests in Japanese smaller companies. Baillie Gifford will naturally go through some difficult periods as a result of their growth style of investing, and indeed these specific areas of the market, but it remains a quality investment house in my view with first rate research capabilities. It would be no surprise to see these trusts bounce back in 2022, although maybe not delivering the same level of performance as their Schiehallion stablemate.

10 best performing investment trusts 2021


Price Total Return 2021 (%)



Geiger Counter 


VietNam Holding


BMO Private Equity Trust


NB Private Equity Partners


SLF Realisation Fund


Tufton Oceanic Assets


Riverstone Energy


Ashoka India


Standard Life Private Equity


10 worst performing investment trusts 2021


Price Total Return 2021 (%)

Baillie Gifford Shin Nippon 


Fidelity China Special 




Golden Prospect Precious Metal 


Edinburgh Worldwide


Petershill Partners


Biotech Growth 


JPMorgan Chinese Growth & Income


Baillie Gifford China Growth


DP Aircraft I Limited


Source: JP Morgan, Quilter Cheviot, as at 31/12/2021. Past performance is no guarantee of future returns.

Turning attention to the open-ended fund space and the list of top 10 best performers are dominated by US focused funds. That includes four US equity focused funds and two technology funds, which naturally have a heavy bias towards the region. This is to be expected, given how well the region performed last year and the fact the mega cap tech businesses shows no sign of slowing down, despite a quieter year compared to others. Of course the start of 2022 has seen quite a shift in leadership away from tech in the first few days.

India was the other theme that performed well, with three of the top 10 funds, and very much the place to invest within emerging markets last year. With China still looking a rather uncertain place to invest, India could be an interesting alternative for investors over the next few years looking to take advantage of a growing middle class and increased infrastructure spending.

The top spot, however, goes to Guinness Global Energy, no doubt buoyed by the recovery in the oil price since the start of 2021.

Like in the investment trust space, China dominates when it comes to the laggards, with three of the 10 funds. Regulatory issues and state interference have been major themes in the country in 2021 and this has spooked investors somewhat. The outlook for the country remains uncertain, but given the falls seen last year it would be a surprise to see the same name appearing at the bottom of the chart in 2022.

And finally, highlighting the volatile nature of commodities, while an energy focused fund came out on top, gold endured a very difficult 2021, and two of the top three weakest investing in gold miners. Ultimately, these funds are at the mercy of movements in the price of gold, with added volatility of equity markets.

10 best performing funds in IA universe 2021


Total returns (%) in GBP

TB Guinness Global Energy


Liontrust India


VT De Lisle American


Stewart Investors Indian Subcontinent Sustainability


Jupiter India


L&G Global Technology Index


HSBC US Multi-Factor Equity


Fidelity UK Smaller Companies


Halifax North American


Scottish Widows American Growth


10 worst performing funds in IA universe 2021


Price Total Return 2021 (%)

Threadneedle Latin America


VT Clear Peak Capital UK Long/Short Equity


ASI Strategic Investment Allocation Fund


Invesco China Equity Fund


Threadneedle China Opportunities


Morgan Stanley Developing Opportunity


Baillie Gifford Global Discovery


WS Charteris Gold and Precious Metals


Fidelity China Consumer


IFSL SIM Junior Gold & Silver Miners


Source: Morningstar, Quilter Cheviot. Past performance is no guarantee of future results.

Moving away from performance, but continuing with the investment trust world, it was another very good year for asset raising. Last year saw over £14bn raised in total, a combination of new IPOs, but primarily secondary raises, which accounted for around three quarters of the total. Among the highlights, I’d point to the infrastructure and renewables sector, which raised over a third of that, and to Smithson, the global small and mid cap trust, which raised over half a billion through ongoing issuance. Whilst 16 IPOs is not to be sniffed at, there have certainly been stronger years in that regard, but there continues to be interesting new launches expanding the areas in which investors might consider. Among those, Seraphim, the space focused private equity vehicle is the one that catches the eye in terms of a unique addition, but perhaps we’ll see more as is often the case when one trust is particularly successful.

What is clear is that it remains hard to launch a trust, but once it is launched, the power of ongoing issuance can grow even the smallest of launches. I suspect we will only see increasing interest from asset managers not represented going forward. Long-term, stable capital with the ability to grow, if successful, is clearly highly attractive in these times where most asset managers are fighting off outflows from active strategies.

What about the passive industry? According to data from the FT, inflows topped $1trillion for the first time ever. Among the areas of growth have been bond ETFs, making up a little under a quarter of the inflow. Thematic ETFs have also been a clear growth area, and that has been reflected in the open-ended world. This ranges from some of the ESG (environmental, social and governance) related themes like energy transition through to a recently launched Metaverse ETF.  Perhaps more concerning is the growth in leveraged ETFs, which are clearly higher risk, as well as ETFs that allow access to otherwise unregulated markets such as Bitcoin and Non-Fungible Tokens or NFTs.

That’s it from me today. It’s week one, and so far, markets are already giving us plenty to talk about. As ever, thanks for listening and stay safe!

This is a marketing communication and is not independent investment research. Financial Instruments referred to are not subject to a prohibition on dealing ahead of the dissemination of this marketing communication. Any reference to any securities or instruments is not a personal recommendation and it should not be regarded as a solicitation or an offer to buy or sell any securities or instruments mentioned in it.

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