Two new names appear in the top 10 most consistent fund management houses, according to the latest FundCalibre Fund Management Equity Index findings. But consistency prevails, with the other eight fund houses retaining their top 10 slots from last year.
One, Morgan Stanley, has gone straight in at number one as it now has sufficient funds with long enough track records to be eligible for inclusion. Hermes, at number four, has also catapulted in from 18th position last year.
The survey looks at actively managed equity funds recognised by the Investment Association and compares each with its sector average over five years to the end of 2017. Each fund group’s various fund performances are then collated and averaged to give a single figure for the group. Groups with fewer than four eligible funds are excluded.
Morgan Stanley, with six eligible funds, produced sector outperformance averaging 46 per cent over five years, while Hermes, also with a stable of six funds, outperformed by an average 31 per cent. In both cases one of the six failed to outperform its sector, so that level of outperformance was produced by five funds.
However, River & Mercantile, which came second this year with 37 per cent average outperformance (having occupied top slot last year) fielded a full team of outperforming funds. It is not alone: within the top 10, both Unicorn and SVM also recorded sector outperformance from all of their funds.
In contrast, although Old Mutual achieved overall outperformance of 27 per cent, only just over half of its 23 funds individually beat their sectors.
One notable feature is the predominance of relatively small fund houses in the top 10: only three of the 10 listed have more than 10 funds, with Old Mutual having the most. The biggest houses - the likes of Schroder, Fidelity and JPMorgan – are all down in the second quartile of the 79-strong table, with around three quarters of their eligible funds outperforming their sectors.
However, Darius McDermott, managing director of FundCalibre, points out that it’s not all about boutique firm relative success. ‘Nine out of the top 20 companies have 10 or more funds and three of the top 10 largest companies have been in the table each year since our survey began.’
He gives the example of Baillie Gifford, in third place this year with 15 eligible funds. ‘Almost 85 per cent of these funds outperformed by an average 17 per cent back in 2015. Today 93 per cent have outperformed by an average 37 per cent. This consistency, over such a large number of funds, suggests a high degree of skill among these fund management teams.’
McDermott adds: ‘The consistency of a number of groups in this survey is a highlight and one not to be sniffed at: eight out of last year’s top 10 groups maintained their high standards of performance.
‘Even more impressive is the fact that five of these companies have been in the top 10 in each of the past four annual surveys – a period of time spanning nine years of performance figures.’ These five long-running fund house stars are SVM, Old Mutual, T Rowe Price, Baillie Gifford and Unicorn.
Keep up to date with all the latest financial news and investment tips by signing up to our newsletter. Email subscribers will also receive a free print copy of Money Observer magazine.
Subscribe to Money Observer Magazine
Be the first to receive expert investment news and analysis of shares, funds, regions and strategies we expect to deliver top returns, plus free access to the digital issues on your desktop or via the Money Observer App.Subscribe now