Wealth Shortlist Update: AXA WF UK Equity

Chris St John is an experienced investor in the UK stock market and has managed the fund since its launch in 2016. The fund was added to the Wealth Shortlist because of the manager’s and firm’s expertise in UK companies. However, since its launch, the fund has not performed as well as the broader UK stock market. Over this timeframe the fund has delivered returns of 47.56%*, lagging behind the 77.33% return from the FTSE All Share index, and the 59.01% return from the IA UK All Companies sector average.

The fund performed well for several years after its launch, but the last few years have been difficult. It tends to invest more than the FTSE All Share index in medium and smaller-sized companies, which haven’t performed as well as larger companies in recent years. The fund’s growth bias has also posed a headwind as the value style of investing has held up better.

Our view

As part of our review of this fund, we recently met again with the manager to address our concerns.

During periods where a manager's style is out of favour, we like them to stick to their investment process and focus on the long term. While St John has done this, we also like to see managers reflect on performance, see good examples of lessons learned, and expect to see some evolution in process and assessment of risk. However, we don’t feel this has happened as much as we’d like to see and our confidence in the fund's ability to outperform over the long term has reduced.

In addition, our analysis suggests that, for several years, the manager hasn’t consistently added value through stock selection. This is a key factor we analyse when assessing a fund manager, and represents their ability to pick strongly performing companies regardless of what size or sector they’re in.

As a result, we have decided to remove the fund from the Wealth Shortlist. We will continue to monitor performance and let investors know if our views change.

Although we're removing the AXA WF UK Equity fund from the Wealth Shortlist, this isn't a recommendation to make any changes to an investment portfolio. Investors should make sure any investments match their investment goals and attitude to risk and are held as part of a diversified portfolio. If you're not sure if an investment is suitable for your circumstances, please seek personal advice.

We've recently published a full fund update on this fund.