Industry stalwart Richard Buxton’s £3.2bn portfolio appears in the top-10 holdings of 50 funds of funds in the IMA unit trust and OEIC universe – nine more than AXA Framlington UK Select Opps, which came in second.
Most popular funds
Source: FE Analytics
The top-10 list suggests managers clearly favour UK funds that are headed up by a long-serving manager.
Out of the seven most held actively managed funds in the sector, five of them have been run by their current team for at least 10 years.
This includes Schroder UK Alpha Plus, which Buxton has headed up since its launch in June 2002.
Under Buxton’s leadership, the fund boasts top-quartile performance over one, three, five and 10 years. According to FE Analytics, over the last decade the fund has returned 250.71 per cent, beating the IMA UK All Companies sector average by nearly 100 percentage points.
Schroder UK Alpha Plus has also considerably outperformed the FTSE All Share, which has returned 170.24 per cent over this time.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
Among the biggest admirers of the Schroder portfolio are Marcus Brookes and Robin McDonald, who hold it in their Cazenove Multi-Manager UK Growth fund.
Margetts International Strategy, run by FE Alpha Manager Toby Ricketts, also holds it.
The second most-held fund among multi-asset managers in the IMA universe is the five crown-rated AXA Framlington UK Select Opportunities.
Forty-one funds count FE Alpha Manager Nigel Thomas’ £3.2bn portfolio as a top-10 holding.
Thomas – like Buxton – has managed his fund since 2002, and has also led it to the top of its sector over that time.
Two funds on the top-10 list – CF Lindsell Train UK Equity and Majedie UK Equity – require steep minimum investments and are therefore unsuitable for retail investors in the UK.
Investors can access them through numerous funds of funds. According to FE Analytics data, 19 hold Nick Train’s £571m fund, including three run by fellow FE Alpha Manager Bill McQuaker.
Majedie UK Equity is held by 14 funds of funds, including the Aberdeen Multi Manager Cautious Managed Portfolio.
FE Alpha Manager John Wood’s £1bn JOHCM UK Opportunities fund is the fifth most popular holding on the list.
The five crown-rated portfolio crops up in the top-10 holdings of 18 funds of funds. Wood has managed UK Opps since its launch in 2005, leading it to consistent outperformance.
Performance of fund vs sector and index since Nov 2005
Source: FE Analytics
Alastair Mundy’s Investec UK Special Situations and new FE Alpha Manager Julie Dean’s Cazenove UK Opportunities are also among the most held funds with multi-asset managers.
Both Mundy and Dean have managed their respective funds for over 10 years.
The remaining three funds on the list are trackers, illustrating the increasing popularity of passives among professional investors.
BlackRock CIF UK Equity Tracker is the most popular of the three, appearing in the top-10 of 23 funds.
HSBC FTSE All Share Index is the only one of the three that can be bought directly with a reasonable minimum investment (£1,000).
Richard Troue, investment analyst at Hargreaves Lansdown, says that choosing a manager with experience provides a much better chance of making money in the long-run.
"Investors will get that element that the manager has seen it and done it all before, and although that doesn’t guarantee you anything – having a manager who has seen how markets react and which sector to be in at certain times is very useful."
"I think the manager’s experience helps them home-in on their own stockpicking capabilities, which is vital to a fund’s performance. We tend to follow managers and not funds, so we only look at managers who have witnessed a full market cycle."
On the topic of trackers, Troue says they are a reasonable choice for a short-term play, but that he would be concerned if a fund of funds manager held one for the long-term.
"For managers who want that kind of broad and cost-saving exposure to a region, then a tracker is a good choice," he said.
"Also, every now and again it can be advantageous to hold a passive fund if the manager has had large inflows and wants to invest in an area of the market but hasn’t quite decided which active fund can add the most value."
"Over the longer term, however, I would want to see a fund of funds manager who isn’t relying too heavily on trackers, because I would want exposure to a range of active managers that can outperform."