Specialist funds: a reliable alarm signal

published 19 June 2006

After examining the performance of more than 1,500 funds, research from Trustnet.com has revealed that between 11 May and 6 June, only 14 funds, essentially bond funds, made positive returns. The ten worst-performing funds fell by more than 15%, but their one-year performance record to 6 June tells a different story. They are all up more than 30%.

According to Brian Dennehy of financial adviser Dennehy Weller & Company, there are two lessons to be learnt from this. The first is to drip cash into emerging market funds monthly, as timing is everything when it comes to this volatile sector.

The second, he tells The Mail on Sunday, is that when investment houses begin launching specialist funds, alarm bells should start ringing. "It's usually a signal that the boat has been missed," he says. Allianz Global Investors and Threadneedle launched emerging market funds earlier this year, RCM Bric Stars and Global Emerging Markets respectively. The former is down 5% since launch, and the latter more than 10%.