While these managers have performed strongly and undoubtedly have bright futures ahead of them, Hargreaves Lansdown’s Mark Dampier believes there is no substitute for experience, arguing that investors are much better off backing someone who has been through an entire market cycle.
With this in mind, FE Trustnet highlights three managers who have run their respective portfolios for the best part of two decades, guiding them through a number of different market conditions.
Hugh Young
The five crown-rated Aberdeen Asia Pacific fund has been headed up by Hugh Young (pictured) since he joined Aberdeen in 1988.
"He’s been through the Asian crisis, the dotcom crash and the boom and bust of the 2000s," said a spokesperson for the group. "He’s seen pretty much everything you can see in Asia."
Young is not always credited with running these portfolios because Aberdeen prides itself on having a team approach.
However, the group confirmed that Young has headed up the team since day one.
Aberdeen Asia Pacific has been a dominant force in the Asia Pacific ex Japan sector throughout the 25-year period, returning in excess of 3,000 per cent.
Unfortunately, the fund’s benchmark and sector do not have data going back that far, but Young’s success since January 1999 – when data for the MSCI AC Asia Pacific ex Japan index first starts – is very clear.
Rolling 3yr returns of fund vs sector and index 1999-2012
| Name | 1999-2002 returns (%) |
2002-2005 returns (%) | 2005-2008 returns (%) | 2008-2012 returns (%) |
|---|---|---|---|---|
| Aberdeen Asia Pacific | 44.65 | 51.98 | 101.29 | 26.62 |
| MSCI AC Asia Pacific ex Japan | 14.59 | 29.2 | 109.36 | 6.33 |
| IMA Asia Pacific ex Japan | 31.13 | 21.17 | 114.53 | 4.55 |
Source: FE Analytics
Taking 1 January 1999 as a starting point, the fund has significantly beaten its benchmark and sector average over every rolling three-year period, with the exception of 2005 to 2008.
Over this period, Aberdeen Asia Pacific ex Japan managed returns in excess of 100 per cent, only slightly underperforming.
This has led to very strong cumulative returns, as the graph below shows.
Performance of fund vs sector and index since Jan 1999
Source: FE Analytics
The fund has also been significantly less volatile over the period, losing far less during falling markets.
This is in keeping with Young’s focus on quality companies with strong balance sheets and good corporate governance.
This, according to FE Research, is what makes it stand out against many of its rivals. The team said: "The fund makes the most of Aberdeen’s team-based philosophy, and investment in local resources, by putting good stockpicking at the core of its approach."
"The team’s focus on quality and its long-term conviction in the companies it invests in mean that turnover is low and it only makes a handful of trades each year."
"The key to this is using its extensive analyst resources to gain a greater understanding of Asian companies than anyone else and putting this informational advantage to good use."
"The group’s successful application of this strategy has resulted in the fund becoming one of the standout performers in the region."
Aberdeen Asia Pacific requires a minimum investment of £500 and has an ongoing charges figure (OCF) of 1.84 per cent.
Young heads up a number of other open- and closed-ended portfolios, including the five crown-rated Aberdeen New Thai IT and Aberdeen Asian Income IT.
Neil Woodford
FE Alpha Manager Neil Woodford (pictured) has headed up the Invesco Perpetual High Income fund since February 1988 – around the same time Young arrived at Aberdeen.
Woodford guided the portfolio through the early 1990s UK recession, the rise and fall of the dotcom bubble, and the subsequent debt-fuelled recovery, which culminated in the 2008 financial crisis. His long-term approach has led to periods of underperformance along the way, but on a rolling five-year basis, his record speaks for itself.
While FE does not have data for the IMA UK Equity Income sector average going back to 1988, it does for the FTSE All Share – Woodford’s benchmark.
Rolling 5yr returns of fund vs index 1988-2012
| Name | 1988-1993 (%) | 1993-1998 (%) | 1998-2003 (%) | 2003-2008 (%) | 2008-2013 (%) |
|---|---|---|---|---|---|
| Invesco Perp High Income | 116.27 | 157.75 | 7.7 | 150.92 | 35.87 |
| FTSE All Share | 104.19 | 128.08 | -24.47 | 103.93 | 32.44 |
Source: FE Analytics
Using 6 February 1988 as a starting point, Invesco Perpetual High Income has beaten its benchmark over every rolling five-year period since launch – usually by a significant margin.
The fund has beaten the index by more than 1252.55 percentage points over the period, and has also been significantly less volatile.
Invesco Perpetual High Income requires a minimum investment of £500 and has an OCF of 1.69 per cent. It is one of the largest funds in the IMA universe, at £13.5bn.
Performance of fund vs sector since Feb 88
Source: FE Analytics
Ian Spreadbury
No bond FE Alpha Manager has the track record to match Woodford and Young's, but Ian Spreadbury (pictured) comes closest.
He has headed up the £3.3bn Fidelity Moneybuilder Income fund since October 1995.
In general, bond funds have performed well over the 18-year period, but endured steep sell-offs during 1998 and 2008.
Moreover, record-low interest rates and yields have made it a particularly tough time for managers since the financial crisis in 2008.
Spreadbury has guided the fund to strong cumulative and consistent performance over the period.
Performance of fund vs sector since launch
Source: FE Analytics
Fidelity Moneybuilder Income is up 204.26 per cent since launch, beating the IMA Sterling Corporate Bond sector by 46.99 percentage points.
It has beaten the sector over every three-year rolling period since opening for business, and has also outperformed since October 2010 as well.
Rolling 3yr returns of fund vs index 1995-2013
| Name | 1995-1998 (%) | 1998-2001 (%) | 2001-2004 (%) | 2004-2007 (%) | 2007-2010 (%) | 2010-present (%) |
|---|---|---|---|---|---|---|
| Fidelity Moneybuilder Income | 41.84 | 12.69 | 15.81 | 8.92 | 22.05 | 20.14 |
| IMA Sterling Corporate Bond | 34.33 | 11.65 | 12.92 | 8 | 15.66 | 18.77 |
Source: FE Analytics
The FE Research team says Spreadbury’s consistency is the fund's biggest draw.
"Its major strength is its reliability, as it tends to behave exactly as expected by the team."
"Spreadbury says that he looks for stable returns, an attractive level of income and low price volatility and that is exactly what he has delivered."
"This fund would be an ideal complement to an equity-heavy portfolio, lowering risk for a similar level of return."
The fund, which is currently yielding 3.62 per cent, requires a minimum investment of £1,000 and has an OCF of 1 per cent.