In other words, when the FTSE All Share lost 1 per cent, these funds have lost 0.9 per cent. So defensive skills are scarce. Only the Franklin UK Rising Dividends funds managed to protect investors from the downside during all those five periods.
To conclude, picking a fund manager who is consistently capable of protecting from market setbacks is almost impossible.
Investment myths are extremely commonplace, particularly regarding downside protection.
Active fund managers may be lucky and guess when the next market correction will hit. But to be consistent and prove their skill, they must understand the way the correction will impact the market, so they can position their portfolio accordingly at the right time.
Even successfully positioning the portfolio on more than one occasion, the fund manager may be lucky a second time by holding the companies that actually offer downside protection. Good luck.
Charles Younes is research manager of FE
