Major Polish newspapers have compared the long-term (5-year) management performance of equity funds. In the ranking lists published by Gazeta Wyborcza daily (“Best Funds for Bull and Bear Markets” of 11 January 2010 and Parkiet daily “Fund Management Companies Underperform the Market in the Long Term” of 11 January 2010, Legg Mason Akcji FIO open-end investment fund has been the uncontested leader over the 5-year term.
According to an analysis by the Parkiet stock exchange daily, during the last five years only 5 out of almost 20 domestic equity funds outperformed the benchmark (90 percent WIG broad-market index and 10 percent 1-month Warsaw Interbank Bid Rate). One fund even reported a loss. Over ten years, just 5 out of 11 funds managed to beat the benchmark. Legg Mason Akcji FIO achieved the best result in the 5-year period, returning 72.40% (an average annual return of 11.5%). Over ten years, the Legg Mason Akcji equity fund was also among those that outperformed the benchmark.
“You have to be brave enough to go against the crowd. Three-fourths of those who underperform the market do not want to take risks. Going along with the majority is good for avoiding dead losses, but makes it virtually impossible to succeed”, this was how Tomasz Jędrzejczak, President of Legg Mason Fund Management Company, explained his key to success (Parkiet, 11 January 2010).
“It is sad that so few funds beat the market. According to our analyses of investment strategies, the secret is to adopt a management approach and stick to it – and there is no single approach in the market,” commented a representative of the Analizy OnLine, a company that monitors the Polish investment fund market.
Ten Best Funds Investing in Polish Equities During the Last Five Years
For people who use regular products, the Gazeta Wyborcza article titled “Best Funds for Bull and Bear Markets” will certainly prove very interesting, possibly enabling them to assess their investment choices made several years ago. The text sums up the performance of equity funds during the most recent stock market cycle. According to the study, from 2005 to 2009 only two equity funds managed to attain average annual returns in excess of 10%, significantly outperforming the WIG broad-market index (+8.5%). Again, Legg Mason Akcji FIO took the top spot, achieving an excellent average annual performance of 11.5%.
In the article, a group of funds, that initially suffered small losses when stocks went down, and then reported smaller gains when they rebounded, was also selected. These funds (Legg Mason Akcji FIO among them) were described as “relatively insensitive to changes in the business cycle” (Gazeta Wyborcza daily, 11 January 2010).