Smaller firms fail to plug hole in the FTSE left by big oil, big mining, and big finance one year on from record high

 
Billy Bambrough
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Over the past 12 months the FTSE has failed to hold onto gains (Source: Getty)

Despite a FTSE fightback over the last few months, the blue-chip index remains well off its record close high of 7,103.98 set almost a year ago on 27 April 2015.

Since February the FTSE 100 has added around 700 points after sinking as far as 5,536.97.

It's now under 1,000 points of its high, but the recent rally already seems to be losing momentum with the FTSE 100 closing either flat or down in its last five sessions. Today the FTSE closed down by almost one per cent at 6,260.92.

Since 27 April last year 36 FTSE companies have recorded a rise in their share price.

However the scale of price falls in some of the UK’s biggest companies means overall the index is still down, the size of losing companies just outweighs the gainers.

Best and worst performing shares since 27th April 2015:

 

 

% change in share price

Fresnillo PLC

47

DCC PLC

42

Randgold Resources Ltd

31

Paddy Power Betfair PLC

29

Intertek Group PLC

23

 

 

Rolls-Royce Holdings PLC

-35

Pearson PLC

-39

Antofagasta PLC

-41

Standard Chartered PLC

-48

Glencore PLC

-48

Laith Khalaf, senior analyst at Hargreaves Lansdown, said:

It’s easy to get carried away with the twists and turns of the FTSE 100, but it’s important to bear in mind the headline index is heavily influenced by the performance of the largest stocks, so doesn’t give the full picture of how UK plc is doing.

It's not all bad news, however.

Actively managed funds have avoided the worst of the carnage in commodity and banking sectors, with 36 per cent of UK funds making a positive return over the last year and 9 out of 10 funds beating the FTSE 100 index.

Most funds however are benchmarked to the broader FTSE All Share Index, which has done better than the FTSE 100, returning -6.6 per cent, compared to a total return of -7.8 per cent for the FTSE 100.

Even so, over 80 per cent of funds have beaten this higher hurdle.

Smaller companies funds have done particularly well with the average fund in this sector has returned 5.3 per cent over the last year.

The outperformance of active fund managers can be attributed to two key factors; their propensity to avoid mega-caps in favour of more modestly-sized companies, and their underweight to the oil and gas, mining and banking sectors according to Hargreaves Lansdown.

As of the end of April last year, UK fund managers (excluding smaller companies funds) held the following weights in their portfolios compared to the index:

Sector Average UK fund FTSE All Share Index Funds underweight by
Banks 7.60% 10.90% 3.30%
Mining 4.30% 6.00% 1.70%
Oil and Gas 6.90% 12.10% 5.20%

Khalaf added:

Active fund managers, particularly those investing in smaller companies, have largely sidestepped the worst of the problems encountered by banking and commodity companies since last April. As a result many fund investors have probably done better than they might expect over the last year.

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