Top-performing sectors lose in the popularity stakes

The best selling funds and IMA sectors over 2007 bore little correlation to the best performers, according to separate figures released last week by Lipper and Fidelity FundsNetwork.

Asia Pacific excluding Japan and Global Emerging Markets were by far the best performing IMA sectors over the year, according to Lipper.

Asia Pacific excluding Japan hit the number one spot, returning 36.33% over the year to December 31. The second best performer, Global Emerging Markets, returned 34.8% over the same period.

However, these were not the most popular sectors with investors, according to Fidelity FundsNetwork. Only one of them, Asia Pacific excluding Japan, made it into the top 10 best-selling sectors on the platform over 2007. Global Emerging Markets did not make the list even though 70% of the top 100 fund performers in 2007 were emerging market related.

Instead investors opted for UK Equity Income, the best-selling IMA sector overall on Fidelity FundsNetwork in 2007. However, Lipper’s figures show that UK Equity Income was the fourth worst performing sector over the year, falling 1.71% in value.

The most popular fund was Invesco Perpetual High Income. It returned 6.97% from January 1, 2006 to January 1, 2007, according to Morningstar. The top performing fund was Gartmore China Opportunities, returning 71.22%.

Hilary Coghill, director, City Asset Management, says the popularity of UK Equity Income funds is partly a result of the British retail investment psyche.

“If you are a UK retail investor [there is a belief] you should have the majority of your assets in the UK,” she says.

“There is a perception that global and emerging markets are higher risk. I think people should not be so UK-centric. I think the popularity of global equity income funds will increase.”

Coghill has been selling out of UK Equity Income since the start of the year.