It was a mixed bag for the Trustnet editorial team in 2021 as our fund picks failed to beat the MSCI ACWI over the course of the year, but there were some bright spots.
The year was a testing one for investors as, despite the rise of global stocks, markets veered wildly between high growth and value strategies.
This rotation was a help to some of our selections, but a hinderance to others. On average, our picks made a 16.2% return, 3.7 percentage points below the index, but a reasonable gain overall, considering one selection lost money last year.
Gary Jackson, head of editorial, came out on top. His selection of VT Teviot UK Smaller Companies made a stellar 29.1%, 9.5 percentage points more than the benchmark index.
Total return of our fund picks as an average vs the MSCI ACWI index
Source: FE Analytics
Last year, he said that the “long-term play” hit a trifecta of unloved areas: the UK, smaller companies and value stocks, all of which served him well in 2021 as these stocks recovered from the Covid pandemic.
In second place was Jonathan Jones, although his pick was made while at a different publication. He selected the 3i Group investment trust – a private equity specialist – which returned 29% on the year.
He suggested that with companies staying private for longer – a trend that has been ongoing for many years – there were good opportunities away from traditional markets. This proved the case in 2021, as the trust beat the MSCI ACWI index by 9.4 percentage points.
Pictet Security, selected by former Trustnet news editor Rob Langston, was third. The fund was the only other pick to beat the global index, returning 24.7% in 2021.
A year ago, he said an increasing number of phishing attempts would become “a greater problem as more people have moved their lives online during the pandemic”.
Just 0.4 percentage points behind the MSCI ACWI index, reporter Eve-Maddock-Jones’ selection of Pictet Global Environmental Opportunities also had a strong year, returning 19.2%.
Last year she said that an increase in regulatory and government policy centred around tackling climate change would happen in 2021.
“The fund looks well-placed and supported by the wider Pictet Asset Management’s sustainable commitments to take advantage of this growing trend and is already ahead of new regulation which may catch-out some funds in the new year,” she said.
Trustnet Magazine editor Anthony Luzio was also just behind the index with his pick: the Henderson Smaller Companies Investment Trust.
Like Jackson, he said that with Brexit clarified and vaccine roll-outs started, foreign investors would come back to the UK as there would be “some clarity on the future direction of the country”.
The trust had a good year, but its growth-at -a-reasonable-price way of investing lagged some of its more value-orientated peers.
Total return of our fund picks vs the MSCI ACWI index
Source: FE Analytics
The final pick to make a profit was senior reporter Abraham Darwyne’s selection of Scottish Mortgage. In many years this would have led the pack, but in 2021 the fund made 10.5% – a strong year in absolute terms but a lacklustre one compared with others on the list.
Last year some of the trust’s biggest names shone, such as its largest holding Moderna. Shares in the drug company, which is best known for its Covid vaccine, have doubled over the past year.
However, the trust was hit by regulatory impacts in China, where the government imposed a crackdown on online gaming, among other areas. This hit the likes of Tencent and Meituan, both top-10 holdings in the portfolio.
The big weight on our average, however, was former Trustnet reporter Rory Palmer’s selection of Premier Miton US Smaller Companies, which lost money in 2021.
A year ago, he said “US small-caps should see a lift from the economy’s early-cycle dynamics, increased merger and acquisition activity from cash-hoarding companies and the shift from lagging large-caps to playing catch-up”.
Although the fund rallied early on in the year, investors became more cautious as the spread of new Covid variants such as Delta and Omicron started to come through, selling out of their higher-risk assets amid fears that the US economy could struggle. Overall, the fund lost 3.4% on the year.