While these funds have proved their worth over an extended period of time, beating off competition from much larger, higher-profile rivals, they have failed to attract much in the way of inflows.
None of the top-performing funds in IMA UK All Companies have more than £1bn AUM, while only two – JOHCM UK Equity Income and Schroder Income – made the cut in the UK Equity Income sector.
The largest IMA UK All Companies fund that made it on to the list is Julie Dean’s Cazenove UK Opportunities portfolio, which has £741m AUM.
Top-performing UK Equity Income funds over 5-yrs
| Name | 5yr return(%) | AUM (£m) |
|---|---|---|
| Unicorn UK Income | 60.15 | 63.1 |
| JOHCM UK Equity Income | 37.57 | 1,300 |
| Trojan Income | 31.68 | 860 |
| Natwest Equity Income | 25.23 | 63.1 |
| Royal Bank of Scot Equity Income | 25.22 | 59.8 |
| Cazenove UK Equity Income | 22.88 | 141.2 |
| Schroder Income | 22.31 | 1,072.50 |
| Aviva Inv UK Equity Income | 22.05 | 700.4 |
| CF OLIM UK Equity | 21.97 | 9.2 |
| Invesco Perp UK Strategic Income | 21.89 | 202.8 |
Source: FE Analytics
Ten of the top-20 UK growth funds have less than £100m, including the five crown-rated IM Matterley Equity fund, which has £8.7m AUM, and Giles Hargreave’s £78.5m Marlborough UK Leading Companies portfolio.
It is not uncommon to see small funds at the top of the performance tables over short periods, but it is perhaps surprising that some of these portfolios have not gained wider recognition for their dominance in the long-run.
Some of the funds featured here have experienced mass inflows in recent months; namely Trojan Income and Cazenove UK Opportunities. The latter has seen its AUM almost quadruple in the last 12 months alone.
Top-performing UK All Companies funds over 5-yrs
| Name | 5yr return (%) | AUM (£m) |
|---|---|---|
| MFM - Slater Growth | 78.73 | 58.2 |
| Liontrust - Special Situations | 73.69 | 550.1 |
| Unicorn - Outstanding British Companies | 63.88 | 11.4 |
| Stan Life Inv - UK Equity Unconstrained | 63.4 | 456.6 |
| Royal London - UK Mid-Cap Growth | 62.81 | 91.3 |
| Cazenove - UK Opportunities | 59.56 | 741.1 |
| Franklin - UK Mid Cap | 55.6 | 607.5 |
| Lindsell Train - CF Lindsell Train UK Equity | 52.96 | 538.6 |
| L&G - UK Alpha | 39.37 | 159 |
| F&C - UK Mid Cap | 38.27 | 64 |
Source: FE Analytics
However, others have seen next to no uptake at all. The CF Olim UK Equity fund, which is a top-quartile performer over one, three, five and 10 years, has just £9.2 AUM.
Unicorn UK Income, which is number-one in the highly competitive UK Equity Income sector over three and five years, has just £63.1m AUM.
In IMA UK All Companies – a sector comprising almost 300 funds – the Unicorn Outstanding British Companies portfolio is a top-five performer over three and five years, with returns of 61.51 and 63.88 per cent respectively.
It is also consistently one of the least volatile and is top-five in terms of Sharpe ratio over both time periods.
However, John McClure and Chris Hutchinson’s portfolio is just £11.5m in size and has seen its assets grow by just £2m in the last year.
Paul Davis of Clear Financial Advice says these funds will struggle to garner much interest until they get more than the all-important £100m figure under their belt.
"I personally put a £100m filter on when looking at funds," he explained. "Anything under this and you’ve got to question the financial strength of the underlying firm."
"Yes these funds have performed well, but I think you are putting your clients at risk if you don’t know for sure that that company will be there in a few years’ time."
Davis also says these funds have additional manager risk.
"The likelihood of managers staying in the job at a smaller firm is also decreased. If a bigger firm comes knocking, it would be difficult for them to say no."