In a year in which many investors have benefited from artificial intelligence hype and interest rate cuts, there has been plenty to celebrate. But some funds have been unluckier with their returns than others.
The funds in the below list all have a Morningstar Medalist Rating of Bronze or higher, and have a fund size of £50 million or above. We have selected the 10 with the lowest return from the categories used by Morningstar analysts to organize and assess performance. These strategies represent categories across equity, equity income, allocation and bonds.
Funds underperforming against their category so far this year include:
• MI Quilter Cheviot North American Equity Fund
• WS Lindsell Train UK Equity Fund
• First Sentier Investors – Stewart Investors Global Emerging Markets Leaders Fund
• Liontrust UK Smaller Companies Fund
• iShares Over 15 Years Gilts Index Fund (UK)
• IFSL Evenlode Investment Funds ICVC – IFSL Evenlode Income
• Climate Assets Balanced Fund
• Virgin Money Bond Fund
• M&G Investment Funds (1) – M&G Global Themes Fund
• Artemis Strategic Assets Fund
MI Quilter Cheviot North American Equity Fund
• Morningstar Medalist Rating for MI Quilter Cheviot North Amer Eq B Acc: Bronze
• Morningstar Category: US Large-Cap Growth Equity
In the year to date, the £739 million MI Quilter Cheviot North American Equity fund rose 2.31%, while the average fund in the US large-cap growth equity category rose 17.94%. This left the fund in the 100th percentile for returns. Over a 12-month period, the percentile ranking remains the same too, with a 9.45% return against a category average of 34.91%. The Quilter Cheviot fund was launched in April 2023. Its highest-rated share class has a Bronze Morningstar Medalist Rating.
WS Lindsell Train UK Equity Fund
• Morningstar Medalist Rating for WS Lindsell Train UK Equity Acc: Bronze
• Morningstar Category: UK Large-Cap Equity
Lindsell Train UK Equity is the second-largest fund in the list. The £2.95 billion strategy has gained 1.48% in the year to date, while the average fund in its UK large-cap equity category is up 9.68%. The Lindsell Train fund, which launched in July 2006, has seen years of underperformance, sitting in the bottom decile over five years, where it has gained 2.43% on average each year. Over longer periods, however, the fund has outperformed. Over 10 years, the fund has an average return of 8.51%-in the 6th percentile-and 11.03% over 15 years-the 2nd percentile. All of the fund’s share classes are Bronze-rated.
Stewart Investors Global Emerging Markets Leaders Fund
• Morningstar Medalist Rating for First Sentier StewartInvGlblEmLdrBGBPAcc: Silver
• Morningstar Category: Global Emerging Markets Equity
Stewart Investors Global Emerging Markets Leaders Fund has dropped 0.24% in the year to date, underperforming the average fund in its category, which rose 9.92%. The fund placed in the 100th percentile for performance. The £441 million fund which launched in December 2003, has climbed 1.67% over the past three years and gained 2.21% over the past five years on an annualized basis. The average global emerging markets equity fund, meanwhile, was down 2.47% over three years and up 4.26% over five years on average. The highest rated share classes have a Morningstar Medalist Rating of Silver.
Liontrust UK Smaller Companies Fund
• Morningstar Medalist Rating for Liontrust UK Smaller Companies R Inc: Bronze
• Morningstar Category: UK Small-Cap Equity
In the year to date, Liontrust UK Smaller Companies fell 1.45%, leaving it in the 100th percentile, while the average fund in the UK small-cap equity category rose 7.47%. The £919 million fund, which launched in August 1995, has lagged its category these past years, dropping 8.85% over the past three years on an annualized basis. However, the category is also down over the same period, with an average return of 6.56%. The longer-term returns have however been stronger than its category, and the fund is in the 9th and 8th percentile over 10 and 15 years annualized. All share classes are Bronze-rated by Morningstar.
iShares Over 15 Years Gilts Index Fund (UK)
• Morningstar Medalist Rating for iShares Over 15 Yrs Gilts Idx (UK) X Acc: Gold
• Morningstar Category: GBP Government Bond
The £2.1 billion iShares Over 15 Years Gilts Index Fund (UK) fell from grace in 2024. It has fallen 3.79% year to date, while the average fund in its category fell 0.2%. Over a 12-month period, however, a 10.26% gain on the passively-managed fund beat the 7.64% gain on the average fund in the GBP government bond category, achieving a top 10 percentile for performance. But, the fund lagged its benchmark, the FTSE Act UK Cnvt Gilts Over 15 Yr Index, by 0.94 percentage points. The BlackRock fund has dropped 15.19% over the past three years and lost 9.96% over the past five years. The oldest share class, which we looked at here, has a Bronze Morningstar Medalist Rating, but its two X share classes are both awarded Gold.
IFSL Evenlode Income
• Morningstar Medalist Rating for IFSL Evenlode Income B Acc: Gold
• Morningstar Category: UK Equity Income
The largest fund in this list, Evenlode Income, is another fund that has outperformed over 10 years, where an annualized return of 9.35% has earned it a spot in the top 2%. But in 2024 so far, £3.2 billion fund has only gained 4.63% while the average fund in the UK equity income category is up 10.02%.
Morningstar initiated coverage of the fund last month, awarding all share classes a Gold Medalist Rating. Manager research analyst Daniel Haydon says: “we like the investment philosophy, which focuses on quality, dividend growth, and self-investment. The bespoke cash flow framework embeds discipline, and the resulting valuation-driven rebalancing has been additive over time.” The Evenlode fund has climbed 6.04% over the past three years and gained 4.96% over the past five years on average.
Climate Assets Balanced Fund
• Morningstar Medalist Rating for Climate Assets Bal C GBP Acc: Bronze
• Morningstar Category: GBP Allocation 60-80% Equity
The £403 million Climate Assets Balanced Fund, which falls into the GBP allocation 60-80% equity category, has climbed 3.64% in the year to date, while the average fund in its category is up 8.59%. The Thesis fund, which launched in February 2010, climbed 14% over 12 months, just below the category average of 14.90%. It is up 1.27% over the past three years and gained 4.78% over the past five years on average. All share classes have Bronze ratings.
Virgin Money Bond Fund
• Morningstar Medalist Rating for Virgin Money Bond: Bronze
• Morningstar Category: GBP Diversified Bond
In the year to date, Virgin Money Bond is in the 98th percentile after underperforming the average GBP diversified bond fund, returning 0.03% against the category’s 2.75%. The £172.7 million fund has returned below the category average across all time periods looked at in this article—from 2024 so far, to 15 years annualized (2.14%). The fund launched in October 1995 and has dropped 4.00% over the past three years and lost 2.55% over the past five years on an annualized basis. However, the category average for both periods are both negative, too.
M&G Global Themes Fund
• Morningstar Medalist Rating for M&G Global Themes GBP A Acc: Bronze
• Morningstar Category: Global Large-Cap Blend Equity
M&G Global Themes gained 4.21% in the year to date, underperforming the average fund in the global large-cap blend equity category, which is up 12.86%, placing it in the 97th percentile. The £2.3 billion fund gained 10.55% over the past year, while the average fund in its category rose 19.02%. The M&G fund, which launched in February 1973, has climbed 4.62% over the past three years and gained 8.76% over the past five years on average. But. like the Virgin Money fund above, the fund has underperformed across all time periods looked at. Its 15-year annual average return is 7.36%. All sterling share classes are Bronze-rated.
Artemis Strategic Assets Fund
• Morningstar Medalist Rating for Artemis Strategic Assets I Acc: Bronze
• Morningstar Category: GBP Flexible Allocation
The £185 million Artemis Strategic Assets, which falls into the GBP flexible allocation category, rose 0.49% in the year to date and placed in the 97th percentile. The category’s average over the same period was 6.77%. The Artemis fund, which launched in May 2009, has outperformed over the medium term. It climbed 5.11% over the past three years, where the fund placed in the 9th percentile, and gained 3.86% over the past five years on average, leaving it in the 48th percentile. Its highest-rated share class has a Bronze Medalist Rating.
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