Moneyspider in the News

Big funds are not always the safest

The Sun 

Investors in PEPs and ISAs hoping for extra income or capital growth from their holdings have been knocked for six by the global stock market turbulence following the US 'credit crunch'. 

But data analyst Moneyspider.com reveals that the hundreds of thousands of ordinary investors with some of the UK's biggest and most popular funds have been hit far worse than others in their sector. 

Over the last year, huge funds run by the likes of baking giant HSBC and leading investment houses New Star and Gartmore have suffered steep losses - while rival, more resilient funds have weathered market storms pretty well. 

In the Equity Income sector - popular with older investors relying on stock market investments to top up income from pensions and part time-work - New Star's Higher Income fund suffered a 21 per cent fall in value over the past year, giving it a Moneyspider.com bottom-ranking E rating. 

Yet if an income-seeking investor had been with rival Invesco Perpetual A-rated High Income fund, they would have lost just six per cent of their investment in the last 12 months. 

Moneyspider.com's Tony Ahearne says: 'Investors need to be especially vigilant during this difficult time in the markets. Any fool can make money managing investment funds in the good times. But here we are concerned with the fund managers who have that instinct for surival and have helped to steer their investors through very choppy waters since the US credit squeeze began to ripple through to global stock market funds.' 

'Our rating system shows how the UK's most popular funds have performed over the past 12 months and it has clearly been a question of the survival of the fittest. While even the best-run funds have for the most part suffered losses in the downturn, some have performed far, far worse than others'. 

'If you hold ISAs or PEPs in the popular Equity Income Sector, for example, you could be losing out massively by being in the wrong fund - yet it is easy to switch to a superior-performing fund.' 

The popular UK All Companies sector has also been badly mauled in the downturn of the past six months or so - but again Ahearne warns that it is crucial to pick the right fund in the sector, otherwise investors could lose their shirts. 

He says: 'If you are with the best performer Merrill Lynch's UK Dynamic fund, then you are holding out pretty well, because the fund is down just 0.56 per cent over the last year. But if you happen to be with the New Star Opportunities fund - enormously popular with the Joe Average investor - you are looking at losses of 22 per cent over the past 12 months.'