The winners and losers

Last year according to citywire only 12% of US Equity funds beat the S and P 500 stock market index last year.

Many UK investors tend to hold a relatively small amount in US Equity funds.  In the past many investors might have been disappointed by the returns achieved, however the US has a reputation for going into and coming out of recession quicker than some other developed countries.

Even through the US have major Budget issues and the unstabilising effect of 2012 being an election year, there have been some small sign of recent progress. 

A recent article from Citywire showed how difficult it can be for Active Fund managers to outperform the index, usually the S and P 500. The index was launched in 1957 by Standard and Poors and is a list of the top 500 companies listed on US stock markets.

Out of the 97 Unit Trusts surveyed only 12 managed to match or beat the return from the index of 2.9% in 2011.

More than 50% of the funds in the survey actually managed to lose UK investors over the same period, with an average return of -1.8%. One of the reasons for this is the weakening of the pound against the dollar.

Over three years (2009- 2011), 40 out of the 97 surveyed managed to outperform the S and P 500 index over this period. But this means that 64% of the funds in question returned below average returns when compared to the S and P Index.

The top performing fund managed to achieve a better performance over 2011 with a return of 8.1% for the JP Morgan US Equity Income Acc fund.

However it is interesting to note that only one fund in the top 10 in 2011 managed to remain in the top ten over a three year period from 2009 to 2011. The return of the S and P 500 over 2009 to 2011 was 37.4%

This demonstrates how difficult it is to continually pick the best perform US Equity Funds on a year by year basis.

Index tracking might not give you top quartile performance, however it is low cost and you will avoid underperforming funds.

This article should not be construed as Consilium Asset Management offering investment advice.The value of investments can fall as well as rise and you might not get back the full value of any investments made.