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FundCalibre reveals top-performing open-ended fund managers

River and Mercantile, Stewart Investors Unicorn run the funds that deliver the most consistent outperformance
February 23, 2017

River and Mercantile, Stewart Investors and Unicorn are the asset managers that run the most consistently outperforming open-ended funds, according to research company FundCalibre. These companies took the top three places in FundCalibre's annual Fund Management Equity Index, which analyses funds' performance against their Investment Association (IA) sector average over five years.

River and Mercantile's actively managed equity funds outperformed by an average of 51 per cent, with all five of its funds beating their respective sector averages. All 10 of Stewart Investors' funds also outpaced their sector averages, generating an average five-year outperformance of 33 per cent, while Unicorn's four funds generated an outperformance of 32 per cent.

"Consistently good active management is not a myth," said Darius McDermott, managing director of FundCalibre. "Six groups have been in our top 10 in the past three years, each in turn demonstrating outperformance over rolling five-year periods. This suggests a high degree of skill among their fund management teams."

Companies that specialise in asset management typically performed better than those whose businesses span a range of financial sectors. But the higher rated companies included those with only a few funds as well as large global asset managers.

Companies that invest via a value style and struggled in previous years were among the highest climbers this year, as this investment style has come back into favour. Examples include JO Hambro Capital Management and M&G.

FundCalibre's survey analysed companies with a minimum of four actively managed equity funds within an IA sector that had been operating for at least five years. It excluded passive, non-equity and multi-manager funds, and those not included in an IA sector.

FundCalibre measured each qualifying fund's out- or underperformance, after fees, against its respective IA sector average. It did this by calculating what percentage of each group's funds beat its sector's average Sharpe ratio - a statistic commonly used for gauging a fund's risk/reward profile. The Sharpe ratio measures how much return a fund generates for each amount of risk it takes: the higher the number, the better the fund's historical risk-adjusted performance. However FundCalibre's research does not account for survivorship bias - the fact that more successful funds tend to stay open while poorly performing ones tend to be closed.

Mr McDermott said choosing a fund based on the overall outperformance of the company that manages it could be an alternative but useful way to select funds. "The fact that 100 per cent of a company's funds are outperforming makes me feel confident that they are a good investment house, but it doesn't mean a fund is going to outperform in the future - there are no guarantees," he explained.

But Sam Lees, head of research at dealing and research site, FundExpert.co.uk, said investors should focus on a fund's individual performance. "We wouldn't tend to look at the fund group particularly," he says. "The only restrictions we would place are that a fund has been running for at least three years and that it has more than £50m. The main thing we look for when selecting growth funds is momentum - has the fund been outperforming over the past six months? Research has shown this to be a successful approach to take. And with an income fund, the main thing we would look at would be the consistency of its payout."

 

Most consistent asset managers

Fund group5 yr average outperformance (%)% of funds outperformingNumber of funds2016 rank
River and Mercantile51.3310055
Stewart Investors33.14100102
Unicorn32.0210041
Baillie Gifford25.58941610
Old Mutual Global Investors25.4167243
SVM25.0210059
Man GLG24.4550417
Artemis21.59100107
T. Rowe Price21.2583124
Marlborough20.8575813

Source: FundCalibre