Our data shows that they are the only funds in the sector – which is made up of more than 270 portfolios – to boast top quartile returns in each of the last five discrete calendar years.
Not only have both funds easily beaten the sector average in each year between 2009 and 2013, they have also outperformed the FTSE All Share in each of those years.
Source: FE Analytics
The two funds are also top-decile performers over a cumulative five-year period, with returns in excess of 190 per cent.
Train has run the five crown-rated CF Lindsell Train UK Equity fund since its launch in July 2006 and while Fraser Mackersie has only been the named manager on the £12m Unicorn Free Spirit fund since 2011, he has worked on it since 2008.
Both funds have been consistent not only in their outperformance, but have also scored well in terms of capital preservation.
For instance, both the Unicorn Free Spirit and CF Lindsell Train UK Equity funds have been top quartile for their annualised volatility, maximum drawdown, downside risk and Sharpe ratio over the last five years.
Stockpicking has really helped both managers, as the funds are also top-quartile performers for their information ratio and alpha generation relative to the FTSE All Share.
Five-year performance figures no longer include the stock market crash of 2008, meaning that investors need to dig deeper to find a portfolio’s track record in times of severe stress.
CF Lindsell Train UK Equity is the only fund in the sector to have achieved top-quartile returns in 2008 as well as in the previous five years – although it lost 25 per cent, Train still beat his peers by 6 percentage points.
Unicorn Free Spirit, on the other hand, lost 35 per cent that year.
Unicorn Outstanding British Companies, which is headed up by MacKersie’s colleague FE Alpha Manager Chris Hutchinson, also made the list.
The £21m fund was a top-quartile performer in 2012, 2011 and 2010, though it slipped into the second quartile in 2012 and 2009.
FE Alpha Manager Julie Dean has become increasingly popular with investors over recent years thanks to a strong track record.
Her five crown-rated Cazenove UK Opportunities fund, which was soft-closed last year, has been a top-quartile performer in five of the last six years – the exception being 2010.
Standard Life UK Ethical, GVO UK Focus and Henderson UK Equity Income – which is headed up by FE Alpha Manager James Henderson – have also achieved the feat of beating the sector in each of the past five discrete calendar years.
A number of portfolios narrowly missed the cut.
One of the best examples is Liontrust Special Situations. The five crown-rated fund, which is run by the FE Alpha Manager duo of Anthony Cross and Julian Fosh, is one of only two portfolios – along with CF Lindsell Train UK Equity – to have registered top-quartile returns in each year between 2012 and 2008.
However, due to the managers’ style of focusing on high-quality companies with an established niche, the fund missed the rally last year and ended 2013 in the bottom quartile of its sector.
Performance of fund vs sector and index in 2013
Source: FE Analytics
Nigel Thomas, who is widely regarded as one of the best managers in the business, would have made the list if his £4.6bn AXA Framlington UK Select Opportunities fund hadn’t dropped into the bottom quartile in 2012.
That is the only year over the last decade where Thomas’s fund underperformed against the sector average.
The last half-decade has on balance been very good for equity investors, with the only particularly difficult year being 2011 when the eurozone crisis deepened. Ed Legget’s Standard Life UK Equity Unconstrained fund has taken full advantage and has been rewarded for taking on more risk.
Our data shows that the £898m fund has been the sector’s best performer over a rolling five-year period, with staggering returns of 354.59 per cent.
The fund achieved those returns by being a top-decile performer in 2013, 2012, 2010 and 2009. However, it missed out on featuring on the list of the most consistent funds as it was the sector’s fourth-worst performing portfolio in the turbulent year of 2011.
Another fund that did make the list is Paul Mumford’s Cavendish Opportunities.
Although there is no particular area of the UK equity market that funds in the IMA UK All Companies sector must invest in, Mumford’s £110m portfolio differs from most as its benchmark is the FTSE Small Cap ex IT index.
Performance of indices over 5yrs
Source: FE Analytics
Because small caps have more than doubled the returns of large caps over the past five years, it is not too surprising to see that Cavendish Opportunities has been one of the sector’s most consistent funds.
However, it underperformed against its benchmark in 2012 and 2013.
There are also a number of funds in the sector that invest purely in the FTSE 250. Two of the standout performers are FE Alpha Manager Michael Ulrich’s F&C UK Mid Cap fund and FE Alpha Manager Mark Martin’s Neptune UK Mid Cap fund.
Both funds have beaten the sector average in each of the last five calendar years and are top-quartile performers over a cumulative five-year period. However, they both failed to beat their benchmark at times over the last half a decade.
F&C UK Mid Cap underperformed against its benchmark in 2012 and 2009 and Neptune UK Mid Cap failed to beat the index in 2013, 2010 and 2009.
Nevertheless, Martin’s fund was one of the best-performing mid cap funds in 2011, making 3 per cent while the index lost 10 per cent.
