After 30 years of relatively stable inflation, rising prices have come back with a vengeance. Rising energy costs, constrained food supplies and global supply chain disruptions have pushed inflation well above the Bank of England’s 2% target.
Though it’s been a difficult time for the economy, some UK companies have adapted well and proved their resilience. This helped the FTSE All Share deliver a 0.3% return in 2022, ahead of all other major market indices.
The FTSE All Share has also made a decent start to 2023, returning 3.1% in the first quarter to the end of March.
Past performance isn’t a guide to the future.
An anaemic growth picture
After posting GDP growth of 0.1% in the final quarter of 2022, optimists will point to the fact the UK managed to avoid a recession through what was a tricky year. The stronger than anticipated performance of the telecommunications, construction and manufacturing sectors proved helpful, following the contraction in the third quarter of the year.
However, looking forward, the gloomy growth outlook is struggling to generate much enthusiasm. The International Monetary Fund (IMF) expects the UK economy to shrink by 0.3% in 2023 and then grow by 1% next year.
The UK stock market and economy are different beasts
While it’s been tough for consumers and businesses, the stock market and the economy aren’t the same thing.
The UK stock market is home to many world-class companies. From international giants selling their products and services across the globe to a diverse array of smaller businesses. Lots of UK companies earn money from operations across the globe. This means they aren’t just reliant on the strength of the UK economy to thrive.
| Index | What it represents | % of company revenues generated overseas |
|---|---|---|
| FTSE 100 | Large companies listed in the UK | 79% |
| FTSE 250 | Medium sized companies listed in the UK | 61% |
| FTSE All Share | All eligible companies listed in the UK | 76% |
Source: JP Morgan, 31/03/2023.
How have our Wealth Shortlist funds performed?
Our Wealth Shortlist selections delivered mixed performance over the past year, although we usually expect this.
If all your funds in a sector are performing well at the same time, they're probably investing in similar areas. That's great when those areas are in favour, but can be painful when they're not. Make sure you take a diversified approach. This means choosing a good mix of managers who have a variety of strengths, styles and areas of focus.
Investing in funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a long-term diversified portfolio.
This article isn’t personal advice. If you're not sure if an investment is right for you, ask for financial advice. All investments can fall as well as rise in value, so you could get back less than you invest.
For more details on each fund and its risks, see the links to their factsheets and key investor information below.
UK Growth
The best performing fund in the UK Growth section of the Wealth Shortlist over the past year was the Legal & General UK 100 Index fund.
The fund aims to track the FTSE 100 – an index of the 100 largest companies listed on the UK stock market. The fund's focus on large companies, which outperformed their smaller peers, boosted performance.
AXA WF UK Equity was the weakest performer of our Wealth Shortlist selections in this sector – returning -9.16%*. The manager’s focus on higher-risk small and medium-sized companies has hurt in an environment where large caps have outperformed. His growth-focused investment style has also been out of favour relative to value.
This has been a difficult year for the fund. However, we’re encouraged that the manager is staying true to his investment process. All fund managers endure periods of weaker returns, and we continue to have conviction in Chris St John as manager of the fund.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Mar 18 – Mar 19 | Mar 19 – Mar 20 | Mar 20 – Mar 21 | Mar 21 – Mar 22 | Mar 22 – Mar 23 | |
| Legal & General UK 100 Index | 7.20% | -18.73% | 22.83% | 15.78% | 4.73% |
| AXA WF UK Equity | 5.77% | -16.30% | 35.71% | 2.11% | -9.16% |
| FTSE All Share | 6.36% | -18.45% | 26.71% | 13.03% | 2.92% |
| IA UK All Companies | 2.89% | -19.22% | 37.93% | 5.25% | -2.07% |
Past performance is not a guide to the future. Source: *Lipper IM to 31/03/2023
More about Legal & General UK 100 Index, including charges
Legal & General UK 100 Index Key Investor Information
More about AXA WF UK Equity, including charges
AXA WF UK Equity Key Investor Information
UK Equity Income
The strongest performer in the UK Equity Income section of the Wealth Shortlist over the past year was the Jupiter Income fund which returned 8.12%*. Manager Ben Whitmore's value-style approach proved more robust in what was a difficult year for many UK Equity Income funds.
The Troy Trojan Income fund was the weakest performer of our Wealth Shortlist selections in the UK Equity Income sector over the past year, returning -4.46%.
The fund has lagged the FTSE All Share index with style headwinds posing a challenging environment. However, we still think Blake Hutchins’ background and experience makes him well placed to navigate the fund through trickier times.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Mar 18 – Mar 19 | Mar 19 – Mar 20 | Mar 20 – Mar 21 | Mar 21 – Mar 22 | Mar 22 – Mar 23 | |
| Jupiter Income | 3.08% | -25.26% | 33.30% | 9.83% | 8.12% |
| Troy Trojan Income | 9.31% | -10.50% | 10.74% | 9.05% | -4.46% |
| FTSE All Share | 6.36% | -18.45% | 26.71% | 13.03% | 2.92% |
| IA UK Equity Income | 3.45% | -20.75% | 32.67% | 10.87% | -0.03% |
Past performance is not a guide to the future. Source: *Lipper IM to 31/03/2023
More about Jupiter Income, including charges
Jupiter Income Key Investor Information
More about Troy Trojan Income, including charges
Troy Trojan Income Key Investor Information
UK Small & Mid-Sized Companies
The strongest performer in the UK Small & Mid-sized section of the Wealth Shortlist over the past year was the FTF Martin Currie UK Mid-Cap fund, though it still lost money with a return of -4.91%*.
The managers only invest in medium-sized companies within the FTSE 250, often considered the ‘sweet spot’ between company growth potential and maturity. Richard Bullas is an experienced small and medium-sized company investor, and he has the support of a team we rate highly.
The Royal London UK Smaller Companies fund had a difficult year, losing 22.20% of its value over the period. Growth is the overarching style of the fund, which means the managers focus on companies with long-term earnings growth potential. This style has been out of favour over the period, and smaller companies have lagged their larger peers, holding back returns.
We think lead manager Henry Lowson is a passionate and experienced smaller companies investor with the potential to deliver attractive returns over the long term. Remember, there are no guarantees and smaller companies are higher risk than their larger counterparts.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Mar 18 – Mar 19 | Mar 19 – Mar 20 | Mar 20 – Mar 21 | Mar 21 – Mar 22 | Mar 22 – Mar 23 | |
| FTF Martin Currie UK Mid-Cap | -1.07% | -16.13% | 39.20% | -3.24% | -4.91% |
| Royal London UK Smaller Companies | -1.04% | -7.71% | 53.18% | -1.10% | -22.20% |
| FTSE Small Cap ex ITs | -3.09% | -24.37% | 74.91% | 5.50% | -12.91% |
| IA UK Smaller Companies | -2.52% | -17.54% | 67.22% | -2.13% | -17.04% |
Past performance is not a guide to the future. Source: *Lipper IM to 31/03/2023
More about FTF Martin Currie UK Mid-Cap, including charges
FTF Martin Currie UK Mid-Cap Key Investor Information
More about Royal London UK Smaller Companies, including charges
Royal London UK Smaller Companies Key Investor Information
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Our fund research is for investors who understand the risks of investing and that investing in funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.