It has now been ten years since Lehman's Brothers was allowed to fail. It has been even longer since the UK government had to bail out Northern Rock; an event which led to people queueing on the streets trying to frantically draw out money and worrying whether our economy would ever return to normal.
As the harsh reality of the sub-prime mortgage crisis really hit home, the UK stock market fell 10% in a week, and had fallen 25% within a month. Global stock markets would continue to fall for a further six months, before bottoming on 9 March 2009.
However, looking back over the past decade, anyone brave enough to invest, when everyone else was terrified, would have made money in pretty much any asset class. It didn't matter what you bought - bonds, property or equities - just as long as you invested. Gains would still have been made.
Analysis of the 2000 plus funds, which have been available to UK investors over the 10 years shows that, with the exception of money market funds (which invest in cash-like assets), every single 'average' fund in every single sector returned more than 30%*.
The best performing sector over the decade was IA Technology and Telecommunications, which returned 338%*. Second was IA Japanese Smaller Companies (311%*) and third IA North American Smaller Companies (294%*). In comparison, the IA UK All Companies sector average return was 125%* while the return on cash would have been 5.9%*.
While the IA Specialist sector also enjoyed good returns of 65.5%*, it is a mish-mash of all sorts of different funds, investing in different niche areas. And when we drilled down further, on an individual fund basis, it was easy to see the exception to the rule: there were two areas that disappointed; energy and Latin America. Some funds lost as much as 50%* over the decade.
Legg Mason Japan Equity, which is on the Chelsea Selection, was the best performer out of all the 2000 plus funds. It returned a stunning 682%*.
The top ten performing funds from the Chelsea Selection are shown on the table below*.
Legg Mason Japan Equity
AXA Framlington Global Technology
Baillie Gifford Global Discovery
Marlborough UK Micro Cap Growth
Polar Capital Healthcare Opportunities
R&M UK Equity Smaller Companies
Marlborough Special Situations
Lindsell Train UK Equity
AXA Framlington American Growth
AXA Framlington UK Smaller Companies
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Darius's views are his own and do not constitute financial advice.
*Source:FE Analytics, total returns in sterling, 15 September 2008 to 10 September 2018.