Three years on from the Brexit referendum: Which funds have fared best?

Next week marks the third anniversary of the EU referendum and the Brexit vote.

While the focus since then has largely been on the fate of the FTSE 100, it's the UK's smallest companies that have shined through the 'doom and gloom', outperforming not only their larger peers, but also their European counterparts.

We compared the performance of all European and UK equity funds* since 23rd June 2016 and the results may surprise you.

UK Small Cap: active management shines through

The average fund in the IA UK Smaller Companies sector has returned 47.92%* over the period, outperforming all other UK and Europe ex-UK equity peers, as well as the index (FTSE Small Cap ex IT) which rose just 26.25%*. This highlights the benefits of active management in this asset class.

The second best-performing sector was IA Europe ex UK, which returned 38.36%*, followed by IA European Smaller Companies, which returned 37.32%*.

The average IA UK All Companies fund, in contrast, returned 32.08%* while the IA UK Equity Income sector average performance was 25.08%*.

Commenting on the performance, Juliet Schooling Latter, research director, Chelsea Financial Services, said: 

“All the ongoing uncertainty and lack of any visibility on the eventual Brexit outcome has meant UK Smaller Companies funds have been very much out of favour, but investors may be surprised by how well they have performed in the face of adversity.

“With another four months left until the next (and possibly final) Brexit deal deadline, and a new prime minister still to be chosen by the conservative party, the uncertainty is likely to continue for some time. Even if we reach a deal, the final outcome of Brexit is also unlikely to be fully understood for many more months - or even years - after that.

“For now, and at least over the medium term, the key will be to be very British and to “keep calm and carry on”, making sure portfolios are well-diversified. There is bound to be more stock market volatility, but that will perhaps allow brave investors to pick up some home-grown bargains along the way.”

Top 10 UK and European equity funds since EU referendum*

  Fund % return
1 TM Cavendish AIM 122.0%
2 Jupiter UK Smaller Companies 89.97%
3 Merian UK Smaller Companies Focus 88.42%
4 MI Chelverton UK Equity Growth 79.43%
5 LF Miton European Opportunities 77.77%
6 CFP SDL UK Buffetology 75.82%
7 TB Amati UK Smaller Companies 73.10%
8 FP Octopus UK Micro Cap Growth 72.96%
9 Aberdeen European Smaller Companies Equity 70.86%
10 Janus Henderson European Smaller Companies 68.87%
  Sectors and indexes % return*
1 IA UK Smaller Companies 47.92%
2 IA Europe ex UK 38.36%
3 IA European Smaller Companies 37.32%
4 IA UK All Companies 32.08%
5 IA UK Equity Income 25.08%
  FTSE 100 35.68%
  FTSE Small Cap (ex IT) 26.25%

*Source: FE Analytics, total returns in sterling, 24 June 2016 to 11 June 2019, funds available on Aegon.

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. Juliet's views are her own and do not constitute financial advice.

Published on 12/06/2019