Growth funds take pounding

Growth funds took a pounding in the September quarter with the news going from bad to worse for Australian investors, according to major ratings house, Morningstar.

The Morningstar assessment of growth funds said the only positive returns achieved over the quarter had come from government bonds and cash with the end result being “another round of abysmal returns for many multi-sector funds”.

Morningstar said the top-performing large cap Australian share fund over the September quarter was the Investors Mutual Industrial Share Fund, which managed to eke out a positive return of 3.48 per cent in circumstances where its strategy of investing in defensive industrial stocks and avoiding resources and other cyclical stocks paid off in the difficult market conditions.

It said that PM Capital’s Australian Opportunities Fund also had a welcome change in fortune, providing a positive return of 1.46 per cent after a year of sub-par performance.

By contrast, it said the EQT SGH Wholesale Absolute Return fund, which benefited last year from overweight holdings in mining and energy stocks, took a beating over the third quarter, trailing the index by close to 8 per cent.

However, it said the SG Hiscock concentrated SGH20 fund remained at the top of the table over the year to September 30, with a return of minus 7.73 per cent, which was in sharp contrast to the Challenger Select Australian Share fund, which was down 38.30 per cent over the year due to its concentrated nature and poor stock selection.