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The best performing funds of the decade

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Investors who have been brave enough to stick with riskier assets over the past ten years are being rewarded.

Over the last decade cash has had the lowest returns, with just under 33%, while the worst performing major market, the TOPIX, returned almost 100%, according to Chelsea Financial Services.

The best market index was emerging markets, returning more than 427%.

The analysis highlighted that when the market dropped to its lowest for 15 years in 2003, investors who bought up undervalued shares would have made money over the long term.

Looking at individual funds, Latin American funds dominate the top of the charts over the decade, with Invesco Perpetual Latin America in first place, having turned £1,000 into £10,135.

It is followed by Threadneedle Latin America and Scottish Widows Latin America. Aberdeen Emerging Markets and Marlborough Special Situations make up the remainder of the top five.

The worst-performing sector, Money Market, has returned just under 20% and 16 of the worst 20 funds were in this sector.

The worst non-cash fund was Aviva Investments Property Trust, which returned just over 21%, followed closely by Manek Growth and Aberdeen Multi Manager Multi Asset Distribution.

While the top-performing funds in different sectors were, in the main, well diversified by company, Invesco Perpetual has been the best investment house for UK income products.

Its bond funds have fared the best in the sterling fixed income space over the last decade with Monthly Income Plus (166.79%), Corporate Bond (83.42%) and European High Yield bond (156.07%) funds respectively coming top of the strategic bond, corporate bond and high yield bond sectors. Invesco Perpetual Income fund was also the best performing fund in the UK equity income sector, returning 267.15%.

Darius McDermott, Chelsea’s Managing Director, said: “Our message to investors then, as it was in February/March 2009, was that we couldn’t tell you that markets would get better that year, but equities were very cheap and a raging buy for the long term. If markets had fallen further, our message would have become even louder.

“The message is not quite the same today as we have seen a big rally since the start of the year and stocks are not as cheap as they were. However, equity investors looking to put money in for a 10 year period could still be well rewarded.

“Given we are also about to mark four years of record-low interest rates, I’d also suggest riskier assets will outperform cash and bonds once again, albeit perhaps not with quite the same margin of difference.”



Best funds (of all retail funds available at the time):
1. Invesco Perpetual Latin American 913.5%
2. Threadneedle Latin America 694.57%
3. Scottish Widows Latin America 680.84%
4. Aberdeen Emerging Markets 666.7%
5. Marlborough Special Situations 614.01%

Worst funds (excluding cash funds) were:
1. Aviva Property Trust 21.16%
2. Manek Growth 21.39%
3. Aberdeen Multi Manager Multi Asset Distribution 23.7%
4. JPM Sterling Corporate Bond 25.15%
5. M&G Short Dated Corporate Bond 29.34%

Best sector average:
1. China 422.15%
2. Global Emerging Markets 387.98%
3. European Smaller Companies 370.59%
4. Asia Pacific ex-Japan 347.60%
5. UK Smaller Companies 263.15%

Worst sector averages:
1. Money Market 19.88%
2. Short term Money Market 23.83%
3. Sterling Corporate Bonds 48.11%
4. Gilt 51.89%
5. Mixed Investment 0%-35% 60.60%

Data source: FE Analystcs 12.03.2003 to 01.03.2013, total returns.