The impact of the COVID-19 pandemic and how markets and sectors sought to deal with it has proved crucial to determining the winners and losers in the latest rebalance of the FE fundinfo Crown ratings with March representing the inflection point at which normally reliable strategies fell short while other, highly-specific strategies paid dividends.
The result has been that highly-specific strategies such as the Atlas Trend Online Shopping Spree fund has gone from being a relative cellar-dweller to being a 5 Crown fund on the back of returning 44.65% over the three years to 30 June as it surfed the wave of consumers turning to online shopping to meet their needs.
The inverse of this phenomenon is that normally reliable strategies such as that pursued by the Legg Mason Martin Currie Real Income Fund struggled amid the market disruption which saw funds in almost every sector take a hit.
Virtually all asset classes took something of a hit with equity, bond and multi-asset sector managers all finding themselves in 1 Crown territory.
However, while virtually every sector was adversely affected in one way or another the global small and mid-cap equities sector did better than most, with the global equity sector also doing reasonably well.
What also became evident from the latest Crowns rebalance is that the larger investment houses have fared comparatively well in terms of 5 Crown ratings largely because of the breadth of their offerings with Colonial First State Global Asset Management (now First Sentier) receiving nine 5 Crown ratings, while both IOOF and Macquarie had 10 5 Crown-funds each.
Many portfolio managers within the funds acknowledged that alongside strategy there had been an element of luck, particularly in the crucial period between March and 30 June.
That was certainly acknowledged by Atlas Trend founder and chief executive officer, Kevin Hua who said the fund had actually benefitted from the COVID-19 pandemic because of the drive towards online shopping, particularly during lockdown.
“Lately, the fund has killed it because of COVID-19 and the thematic that people will shop online whether it is out of desire or necessity,” Hua said. “There are names like Amazon, Walmart and Target that have benefitted from COVID-19.”
