The top-performing domestic equity strategies for the year ended June 30 were all over the map.
No one strategy dominated the listing of the top 10 strategies in the separate account category, according to Morningstar Inc.'s separate account/ collective investment trust database.
Energy/master limited partnership strategies accounted for three of the top 10, making a comeback from last quarter when no MLP strategies placed in the top 10 for the 12-month period. Small-cap growth strategies, which dominated the returns for the year ended March 31 taking seven of the top 10 spots, accounted for only one of the best performers for the year ended June 30. Of the remainder, midcap strategies claimed three spots, small-cap took two and technology, one.
“The last few (quarters) have been pretty dominated by small- and microcap portfolios in particular,” said Adam Baranowski, Chicago-based database leader for separate accounts and hedge funds at Morningstar. However, the makeup of this quarter's list is a reflection of the strong performance of master limited partnerships, both for the quarter and over the past few years, said Mr. Baranowski. “MLPs have been consistent outperformers over the past five years,” he said.
Energy limited partnerships, a new category for the separate account database, had a median return of 33.7% for the year ended June 30 and an annualized 31.5% for the five years ended June 30, outpacing the median returns for the broad domestic equity categories during the same time periods, said Mr. Baranowski. (Previously, MLPs fell under Morningstar's equity energy category.)
The median return for all domestic equity separate account strategies was 25.59% for the year and 19.85% for five years, slightly higher than the Russell 3000 benchmark of 25.22% for one year and 19.33% for five years.
(All returns for periods of more than one year are compound annualized figures.)