Many of the biggest funds – the likes of Neil Wooodford’s Invesco Perpetual High Income, Richard Woolnough’s M&G bond funds and Harry Nimmo’s Standard Life UK Smaller Companies fund have also been aided by powerhouse marketing departments that ensure the products and their track records are kept in the public eye.
However, a number of boutique funds have managed to reach a large size without the backing of a major ad campaign.
Here are five of them.
Trojan
The five crown-rated Troy Trojan fund has reached £2.6bn in size, led by the expert management of Sebastian Lyon.
It is one of only four portfolios run by boutique asset manager Troy.
The fund has made 168.56 per cent over the last decade, outperforming both the IMA Flexible Investment sector and the FTSE All Share.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
It is also top quartile over three and five years.
However, it has lagged its peers in the rally, returning 6.69 per cent over the last year while the sector gained 14.3 per cent. The FTSE All Share made 17.51 per cent over the period.
As FE Trustnet pointed out in a previous article, many of the funds that have lagged in rallies have ended up outperforming their peers over the long-term.
The Trojan fund is a classic example of a "steady eddy" fund that has outpaced its more aggressive rivals – lagging its peers in the rising markets of 2005, 2009 and 2012, but protecting significantly better in the falling markets of 2008 and 2011.
This strategy has made it one of the best performers in the sector over the long-term.
Year-on-year performance of fund since 2005
| Name | 2012 returns (%) | 2011 returns (%) | 2010 returns (%) | 2009 returns (%) | 2008 returns(%) | 2007 returns (%) | 2006 returns (%) | 2005 returns (%) |
|---|---|---|---|---|---|---|---|---|
| Trojan | 2.11 | 8.52 | 14.4 | 11.68 | 1.11 | 6.08 | 11.94 | 15.89 |
| IMA Flexible Investment | 10.13 | -8.73 | 14.57 | 24.03 | -26.11 | 6.78 | 10.23 | 22.87 |
| FTSE All Share | 12.3 | -3.46 | 14.51 | 30.12 | -29.93 | 5.32 | 16.75 | 22.04 |
Source: FE Analytics
Owing to Lyon’s cautious and defensive style, the fund’s largest weighting is to gold.
Among its top holdings are American multinational software corporation Microsoft, British American Tobacco and Warren Buffett’s investment company Berkshire Hathaway.
It is yielding 0.85 per cent.
The fund is soft-closed to direct investment, but investors can access it via platforms.
CF Ruffer Total Return
FE Alpha Managers David Ballance and Steve Russell’s CF Ruffer Total Return portfolio is currently sitting at £2.9bn assets under management.
The fund is one of only seven operated by the boutique house.
It is top quartile in the IMA Mixed Investment 20%-60% Shares sector over three, five and 10 years; however, like the Trojan fund, it has not done as well in the rally of the last year, although it is still second quartile.
Over the last decade, the Ruffer fund has more than doubled the returns of the sector, picking up 175.44 per cent, according to FE Analytics.
Performance of fund vs sector over 10yrs
Source: FE Analytics
The portfolio aims to achieve low volatility, positive total returns and performed phenomenally well in the market crash of 2008, returning 20.86 per cent while the sector lost 15.84 per cent.
It also protected well in the falling markets of 2010 and 2011, counteracting its tendency to lag in rallies.
It requires a minimum investment of £1,000 and has an ongoing charges fee (OCF) of 1.53 per cent.
The fund is yielding 2.5 per cent.
Fundsmith Equity
Terry Smith's Fundsmith Equity fund only launched in November 2010 but has already reached £1.2bn in AUM.
It is top quartile over the last year, returning 27.29 per cent while the IMA Global sector gained 17.54 per cent. The MSCI World index made 18.91 per cent over the period.
Since launch, the fund has gained 52.31 per cent, more than doubling the returns of the sector and index.
Performance of fund vs sector and index since launch
Source: FE Analytics
Among the fund’s top holdings are blue chip consumer goods company Unilever and British tobacco giant Imperial Tobacco.
Smith also has some more unusual holdings such as American soft drinks company Dr Pepper Snapple Group and Domino’s Pizza.
The fund is yielding 0.62 per cent. It is currently the only fund run by Fundsmith.
It requires a minimum investment of £1,000 and has a total expense ratio (TER) of 1.69 per cent.
JOHCM UK Equity Income
UK Equity Income is currently a popular theme, with the likes of Invesco Perpetual High Income and Artemis Income featuring in the majority of UK investors’ portfolios.
The small to mid cap focused JOHCM UK Equity Income fund has managed to reach £1.6bn in size and acts as an excellent diversifier to the core portfolios mentioned above.
The four crown-rated fund, headed up by James Lowen and Clive Beagles, is one of the best performers in the IMA UK Equity Income sector over one, three and five years.
Over five years, the fund has returned 79.25 per cent, well ahead of the sector and FTSE All Share, which made 34.23 per cent and 34.28 per cent, respectively.
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
The fund is one of 15 portfolios run by JO Hambro. It has an attractive yield of 4.6 per cent.
It requires a minimum investment of £1,000 and has a TER of 1.28 per cent.
Majedie UK Equity
This four crown-rated UK All Companies fund, one of five portfolios run by Majedie, is now £1.5bn in size.
The portfolio is top quartile over three, five and 10 years, smashing the returns of the sector and FTSE All Share over each period.
Over the last decade, the fund has made 272.14 per cent, while the sector and index gained 149.83 per cent and 160.12 per cent, respectively.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
The fund has also outperformed the sector and index over the last year, but is second quartile. It is yielding 2.47 per cent.
The fund’s top-10 holdings, which account for 36.81 per cent of AUM, include UK blue chips such as Royal Dutch Shell, GlaxoSmithKline and Vodafone.
The fund requires a minimum investment of £10,000 and has an OCF of 1.53 per cent.