Do select lists successfully identify the top performing funds? They play a big role in guiding self-directed investors, but do the funds on them deliver consistent, market-beating returns?
We pose these questions and driIl down into the performance of each platform’s select list funds in our latest UK Fund Distribution report, D2C Select Lists.
A significant number of funds on the lists haven’t beaten their sector average over a five-year period with the worst lagging its sector by 70%. On the flip side, the best delivered returns of 205% above.
The highest proportion of funds outperformed in the Global Fixed Income, Europe Equity Large Cap and Global Equity Large Cap sectors. Conversely, the list builders struggled to pick outperforming funds in the UK Equity Mid/Small Cap and Asia ex-Japan Equity sectors.
Out of the 14 direct platform select lists analysed, all of them have a majority of outperforming funds ranging from 50% to 89%.
Historic performance is by no means an accurate predictor of future returns but several platforms tell us that a strong track record over three years, five years and even further back is one of the key metrics they use when compiling their select lists. Our consumer research reflects this sentiment; ‘consistent performance over the years’ and ‘good recent performance’ are key factors for self-directed investors.
We examine these figures and more in the full report which will be published next week.