When choosing a fund it is important to look at performance consistency as well as returns. A good place to look for consistent performers is the IC Top 100 Funds list, as a number of the investment trusts in this list (which comprises both open-ended and closed-ended funds) have proved themselves in this respect over the last 10 years. The Association of Investment Companies (AIC) has recently drawn up a list of the 20 most consistent and strongly performing investment trusts over the last decade, and eight of these are IC Top 100 Funds. A number of trusts in this list are also IC tips.
The most consistent investment trust over the 10 years to the end of February 2013 is Scottish Oriental Smaller Companies (SST), an IC tip, which has outperformed the average investment company in nine of the last 10 years, as well as delivering an impressive share price total return of 875.31 per cent. This is followed by IC Top 100 Fund F&C Global Smaller Companies (FCS) and Aberdeen New Dawn (ABD), which have also outperformed the average investment company in nine out of the last 10 years.
But UK Smaller Companies trusts dominate the league table as the most consistent and strongest performers of the last decade with seven out of 20 making the list, followed by Asia Pacific ex Japan with five. Six of the trusts are managed by Aberdeen Asset Management, a specialist in Asian equities.
An important factor in achieving consistency and strong performance appears to be fund manager longevity. During the last 10 years, 12 out of 20 or 60 per cent of these trusts have had the same manager running them for at least a decade, with a number of other companies having the same manager for close to a decade. For example, Harry Nimmo has managed IC Top 100 Fund Standard Life UK Smaller Companies (SLS) for over nine years, while Bruce Stout has managed Murray International, (MYI), another IC Top 100 Fund, for the same time. Peter Ewins has managed F&C Global Smaller Companies for the last eight years.
Scottish Oriental Smaller Companies, the strongest and most consistent AIC member investment trust of the last decade, was managed by Susie Rippingall for over a decade until her retirement on 1 April this year, while Aberdeen New Dawn, the third most consistent investment trust of the last decade, has been managed by Hugh Young since 1989.
"With markets back in risk-on mode, it's worth pausing and remembering that consistency of performance can be more meaningful to investors than a one-off shoot-the-lights-out success," says Annabel Brodie-Smith, communications director at the AIC. "Of course, portfolio composition, charges, and a whole host of other factors also need to be taken into account."
When drawing up its list of most consistent trusts, the AIC looked at the discrete annual returns every year for 10 years across the investment trust sector. Each year the trust's performance was benchmarked against the overall average performance of the investment company industry and the companies that most consistently outperformed on an annual basis were identified. Where two companies had the same consistency score, the volatility of the returns (standard deviation) was used to differentiate between them.
The most consistent, strongly performing investment companies over last decade
| Investment trust | Sector | Fund manager | Fund manager length of service | Number of times outperformed average investment trust over each of last 10 years | Share price total return on £100 over 10 years to end-February 2013 (£) |
| Scottish Oriental Smaller Companies | Asia Pacific – Excluding Japan | Susie Rippingall to 1 April 2013 | 2000 - 1/04/13 | 9 | 875.31 |
| F&C Global Smaller Companies | Global Growth | Peter Ewins | 31/07/05 - present | 9 | 654 |
| Aberdeen New Dawn | Asia Pacific - Excluding Japan | Hugh Young and team | 2/05/89 -present | 9 | 626.72 |
| Aberdeen Asian Smaller Companies | Asia Pacific - Excluding Japan | Chou Chong, Andrew Gillan, Flavia Cheong, Christopher Wong, Adrian Lim | October 1995 -present | 8 | 1062.8 |
| Jupiter European Opportunities | Europe | Alexander Darwall | 20/11/00 - present | 8 | 729.56 |
| Dunedin Smaller Companies | UK Smaller Companies | Ed Beal | 17/01/06 - present | 8 | 481.84 |
| Genesis Emerging Markets | Global Emerging Markets | Team Managed | na | 8 | 721.42 |
| Finsbury Growth & Income | UK Growth & Income | Nick Train | 11/12/00 - present | 8 | 499.83 |
| HgCapital | Private Equity | Nic Humphries | 1/01/01 - present | 8 | 646.86 |
| Montanaro UK Smaller Companies | UK Smaller Companies | David Lindley, George Cooke | 1/07/12 - present | 8 | 516.08 |
| Aberdeen New Thai | Country Specialists: Asia Pacific | Chou Chong, Flavia Cheong, Adrian Lim, Andrew Gillan, Adithep Vanabriksha, Orsen Karnburisudthi | 1/12/94 - present 1/12/96 - present 1/12/00 - present 1/12/01 - present 1/12/02 - present 1/12/06 - present | 7 | 1195.76 |
| Edinburgh Dragon | Asia Pacific - Excluding Japan | Adrian Lim, Flavia Cheong, Andrew Gillan, Chou Chong, Christopher Wong | 31/08/2007 - present 31/08/2007 - present 31/08/2007 - present 31/08/2010 - present 31/08/2010 - present | 7 | 601.15 |
| Standard Life UK Smaller Companies | UK Smaller Companies | Harry Nimmo | 01/09/2003 - present | 7 | 831.39 |
| Henderson Smaller Companies | UK Smaller Companies | Neil Hermon | 01/11/2002 - present | 7 | 627.57 |
| JPMorgan Smaller Companies | UK Smaller Companies | Georgina Brittain | 02/01/1998 - present | 7 | 539.92 |
| Schroder AsiaPacific | Asia Pacific - Excluding Japan | Matthew Dobbs | 20/11/1995 - present | 7 | 551.69 |
| BlackRock Smaller Companies | UK Smaller Companies | Mike Prentis | 30/09/2002 | 7 | 671.7 |
| European Assets | European Smaller Companies | Sam Cosh, David Moss | 20/10/2011 | 7 | 563.06 |
| Invesco Perpetual UK Smaller Companies | UK Smaller Companies | Richard Smith, Jonathan Brown | 06/2002 - present, 05/2010-present | 7 | 488.7 |
| Murray International | Global Growth & Income | Bruce Stout | 16/06/2004 - present | 7 | 557.81 |
Investment trust overall average | 309.2 |
Source: Association of Investment Companies
