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Which Funds Hold the Best Performing UK Stocks?

We reveal the best performing FTSE 100 stocks of 2017 and which funds hold them in their portfolios

Karen Kwok 20 March, 2017 | 12:27PM

The FTSE 100 touched a record closing high last week following the Federal Reserve raising interest rates in the US and the defeat of the anti-immigration Freedom party in the Dutch election.

The FTSE 100 closed up 0.5%, or 38 points, to 7,416. The blue-chip index continued its gain today, up marginally in mid-morning trading to 7,419. The index has gained 3.9% year to date.

“In London it comes as no surprise to learn that the lion’s share of the gains are coming from miners and oil stocks, which are once again revelling in the weaker US dollar,” said Chris Beauchamp, chief market analyst at IG, a UK-based online trading platform.

Data from Morningstar Direct showed that the best performing stock in the FTSE 100 this year is the air services operator International Consolidated Airlines Group (IAG), whose shares are up 30% year to date. It was followed by homebuilder Taylor Wimpey (TW.) and miner Antofagasta (ANTO) of which each are up 25% year to date. Shares of Unilever (ULVR) are also up 23.9%, featuring itself as one of the top four gainers in the blue-chip index to date.

As UK shares continue to show signs of strength, we reveal the funds that hold the best performing UK stocks of 2017 in their portfolios, using data from Morningstar Direct.

Stocks Reverse their Losing Streak of 2016

International Consolidated Airlines and Taylor Wimpey have reversed their losing streak of 2016, when they fell 24.5% and 19.1% in 2016 respectively.  International Consolidated Airlines was one of the 10 worst performing stocks last year.

Not many funds in the market held these two stocks in their portfolios. The Bronze Rated Jupiter UK Growth fund is the only fund with both companies in its portfolio. The fund invests 3.8% of its portfolio in International Consolidated Airlines and 3.3% in Taylor Whimpey.

The fund gains 4.4% year to date. Morningstar analysts continue to believe that Jupiter UK Growth has merit, but analysts are treading cautiously now that the fund is under the sole charge of the fund manager Steve Davies. Ian McVeigh, a highly experienced investor and lead manager of this fund since April 2003, officially stepped down as manager in May 2015.

Steve Davies, who has worked alongside him since 2007, initially as deputy manager and then officially as co-manager from the beginning of 2013, has assumed sole charge of the fund. While analysts have regard for Davies' stock-picking ability, they are treading cautiously with the fund under his sole management and with fewer dedicated resources than previously.

Another UK equity fund Artemis UK Select has 3.3% of its portfolio in International Consolidated Airlines. The fund is currently carrying a Neutral rating by Morningstar analysts. The fund gains 4.1% year to date. Morningstar analyst Samuel Meakin said Following previous manager Tim Steer's departure from Artemis, Ed Legget took over the management of this fund at the start of 2016.

Legget's performance track record on his previous fund in Standard Life Investments was strong, outperforming the UK Flex-Cap Equity Morningstar Category average by a significant margin during his seven-year tenure, said Meakin. However, Meakin says he would like to see further evidence of how Legget adapts to the new working environment at Artemis. Legget seeks to find nonconsensus ideas where he believes a company's growth potential is not reflected in the current share price, Meakin added.

The Montanaro European Mid-Cap fund has 4.3% of its portfolio in Taylor Whimpey. The fund gains 4.4% year to date.

Unilever Proves Popular

While miner Antofagasta (ANTO) has continued to strengthen thanks to the rise of commodity prices over the past year – the stock is up 26% in 2017 – only two funds invest in the stock. Vontobol European Equity has 9.4% of its portfolio in Antofagasta and Cavendish UK Select fund invests 3% of its portfolio in the stock.

Kraft Heinz abandoned its bid on Unilever (ULVR) last month – yet this consumer goods supplier remains a popular stock among global and UK fund managers. The stock is up 24% year to date.

The Gold Rated CF Lindsell Train UK Equity fund invests 9.4% of its portfolio in Unilever and the stock remains the top stock holding in its portfolio. Morningstar analyst Simon Dorricott believes the fund benefits from the stewardship of a seasoned and talented UK equity manager, Nick Train, who has demonstrated a consistent approach. Train's process is differentiated and has proved successful over a number of market cycles, said Dorricott. The fund gains 5.4% year to date.

Stewart Investors Worldwide Leaders has 9.2% of its portfolio in Unilever while Lindsell Train Global Equity has 8.5% in its portfolio. Evenlode Income and St James’s Place Equity Income both have 7% of its portfolio in Unilever while Fidelity UK Select has 6.2% of the portfolio in the stock. 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
Antofagasta PLC767.50 GBX-0.90
Artemis UK Select R Acc518.54 GBP-0.03
Cavendish UK Select Fund A167.40 GBP-0.36
CF Lindsell Train UK Equity Acc373.85 GBP-0.25
Evenlode Income A Acc269.31 GBP0.08
Fidelity UK Select292.91 GBP-0.47
International Consolidated Airlines Group SA590.95 GBX-0.85-
Jupiter UK Growth fund336.55 GBP-0.50
Lindsell Train Global Equity A2.61 GBP0.17
Montanaro European MidCap EUR Inc1.83 EUR-0.22
St James's Place Equity Income Acc420.00 GBP-0.31
Stewart Investors Wldwd Ldrs A Acc GBP430.09 GBP-0.01
Taylor Wimpey PLC180.40 GBX0.17-
Unilever PLC4,287.00 GBX-0.35
Vontobel European Equity A283.07 EUR-0.65
About Author Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk