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Worst Performing Funds and Shares Since the Financial Crisis

Ten years since the beginning of the global financial crisis we examine the funds and stocks that failed along the way

Holly Black 30 August, 2017 | 3:09PM

Northern Rock

Many investors have enjoyed 10 years of rising markets since the first signs of the credit crunch emerged in August 2007.

Since markets hit their nadir in February 2009 the FTSE 100 has soared more than 90%, the S&P 500 has more than tripled, and the MSCI World Index has doubled in value. 

But the past decade has not been universally jubilant. The oil price is less than half its 2008 peak of $147 a barrel, while many industrial and precious metals have moved sideways over the years. The average commodity fund is down 21% over the past 10 years.

Over that period, an investment in the typical money market fund would have returned just 6.3%, while the average property fund is up just 21.6 % and targeted absolute return funds are up 31.6%.

Among the worst fund performers are the MFM Junior Oils Trust, which is down 56.3% over the past decade and the Manek Growth fund, which is down 49.9%. The Aviva Investors UK Property Fund has lost 32.7% over 10 years while Standard Life Investments Global Real Estate is down 20.9%.

Even within the strongest sectors, many funds have missed the mark. While the average global emerging markets fund returned 85.8% over the past 10 years, Templeton Global Emerging Markets returned just 25.1%.

Value Traps

The full extent of the crash did not become apparent until more than a year after it began. Indeed, in 2007 the worst performing asset class – property – was down just 6.2%. But in 2008, 10 of the major 15 asset classes were in negative territory. Emerging markets equities lost 35.2%, Asia-Pacific equities were down 33% and UK equities almost 30%.  

But investors who thought they were getting a bargain by snapping up the cheapest assets have, in many cases, been wrong.

Tom Becket, chief investment officer at Psigma Asset Management, said: “The last 10 years have been a lesson to investors in doing your homework and understanding the risks rather than just buying what is cheap. At best, some of the shares people bought in the crisis would have lost them a lot of money, at worst those companies no longer exist and they will have lost everything.”

Data from Interactive Investor shows how FTSE All Share sectors have performed over the past 10 years. Over that period the financials sector is the worst performer, up just 11.2% – an annualised return of just 1.1%, meaning a £10,000 investment into the sector a decade ago would now be worth just £11,115.

The basic materials sector has returned a measly 1.6% a year over that time, and would have grown that sum to £11,689. That compares with the technology sector which would have more than quadrupled a £10,000 initial investment to £48,530 over the past decade.

Stock Laggards

Meanwhile, Canaccord Genuity has analysed the performance of the 500 stocks which have featured in the FTSE All Share since the bottom of the market in March 2009. At the bottom of the pack is mining firm Lonmin (LMI), whose shares have tumbled 99% over that period. Close behind is gold miner Petropavlovsk (POG), which is down 95%, and Kenmare Resources (KMR), whose shares have fallen 82%.

But it’s not just mining companies which have been hit; the past decade has been a tough one for retailers. Shares in Carpetright (CPR) are down 59% since March 2009, Mothercare (MTC) 63% and supermarket giant Tesco (TSCO) 29%.

Adrian Lowcock, investment director at Architas, said: “In a world which is constantly changing, sectors and companies which were once seen as core to an economy may no longer be needed. Those that don’t innovate and adapt can easily find themselves left behind.”

He points to retailers HMV, Game and Woolworths as key examples in recent years – a rescue plan and a buy-out saved the first two, while the latter has disappeared from the high street. Lowcock adds: “Retail is one area where competition is already tough and now technology has changed the landscape and introduced new rivals.”

There are examples in the banking sector, too. Former staples such as Bradford & Bingley and Northern Rock no longer exist, while the share prices of Royal Bank of Scotland (RBS) and Lloyds Banking Group (LLOY) are still way off their pre-crisis levels.

Lowcock said: “It can be very hard to differentiate between a value trap - shares that are cheap for good reason – and shares which are cheap but good value because they are just out of favour. Investors need to do their homework and not just buy things because they look cheap.”

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
Carpetright PLC11.65 GBX-5.28
Kenmare Resources PLC235.00 GBX-4.08
Lloyds Banking Group PLC54.26 GBX4.47
Mothercare PLC13.75 GBX-1.08
Petropavlovsk PLC9.90 GBX0.00
Tesco PLC240.40 GBX1.91
The Royal Bank of Scotland Group PLC208.80 GBX5.51

About Author

Holly Black  is Senior Editor, Morningstar.co.uk

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