Sentiment towards UK equities has been steadily improving over the past 18 months, with a number of high profile managers such as John McClure expecting UK domestically focused stocks to replicate their strong 2013 performance again in 2014.
However, our data shows that Thomas’s experience in all market conditions attracts the professional managers, as his fund features in 37 portfolios’ top-10 holdings – seven more than Majedie UK Equity, which came in second.
Source: FE Analytics
Two of those 37 funds are Jupiter Merlin Balanced and Jupiter Merlin Growth, both of which are headed up by the FE Alpha Manager trio of John Chatfeild Roberts, Algy Smith-Maxwell and Peter Lawery.
AXA Framlington UK Select Opportunities is also a firm favourite with the managers of the Aviva Investors Multi Manager and Threadneedle Managed Portfolio ranges.
It isn’t hard to understand why Thomas tops the list. He is one of the most experienced UK equity managers in the business, taking over the now £4.5bn fund in September 2002.
According to FE Analytics, over that time his fund has been the 12th best-performing portfolio in the highly competitive IMA UK All Companies sector, with returns of 293.94 per cent, beating the FTSE All Share by 125 percentage points.
Performance of fund vs sector and index since Sep 2002
Source: FE Analytics
It also sits comfortably in the top quartile over five and 10 years. However, it is the consistency of that outperformance which is so impressive, as our data shows that Thomas has beaten the sector average in each of the last 10 discrete calendar years – except for 2012 when he underperformed by 5 per cent.
Nevertheless, those consistent returns have meant that AXA Framlington UK Select Opportunities has scored very well in terms of its capital preservation characteristics. Over the past decade, it has been top quartile for annualised volatility, Sharpe ratio and downside risk.
Thomas’s fund was the second most popular in the IMA UK All Companies sector with managers this time last year, while Schroder UK Alpha Plus came out on top of the list.
However, following the news that star manager Richard Buxton would be leaving Schroders to take up the position of head of UK equities at Old Mutual, the number of funds that hold Schroder UK Alpha Plus in their top 10 has dropped.
Nevertheless, the portfolio – which is now run by former Jupiter manager Philip Matthews – is still a top-10 holding with 18 fund of funds, meaning it ranks sixth on the list of most popular portfolios.
Buxton’s new fund is the fourth most popular in the IMA UK All Companies sector with multi-managers.
Our data shows Old Mutual UK Alpha sits in the top-10 of 26 funds. Ten of those are multi-manager portfolios run by Old Mutual, however.
Buxton took over the now £1bn Old Mutual UK Alpha fund in June last year. Over that time, it has returned 11.05 per cent and has beaten both the sector and the FTSE All Share, which have returned 9.69 per cent and 4.58 per cent, respectively.
Performance of fund vs sector and index since June 2013
Source: FE Analytics
One of the big surprises from this year’s study was that Majedie UK Equity was the second most popular UK growth fund with fund of fund managers, as 30 count it as a top-10 holding – 16 more than last year.
The five crown-rated fund, which has assets under management of £2.3bn, is the ninth best-performing portfolio in the sector over 10 years.
Robin McDonald and Marcus Brookes are clearly fans, given the fact that they have decent exposure to it in their Cazenove Managed, Cazenove Multi Manager Diversity and Cazenove Multi Manager Diversity Balanced funds.
Majedie UK Equity also crops up in three of Aberdeen's Multi Manager funds' top-10 holdings.
Unfortunately for the majority of retail investors, the fund is primarily geared towards institutions, though it can be accessed via a number of fund platforms.
Third on the list was FE Alpha Manager Julie Dean’s Cazenove UK Opportunities fund, as all in all, 29 managers count it as a top-10 holding. These include the Jupiter Merlin Conservative and Growth portfolios.
Dean is a firm favourite with investors and advisers alike, and with top quartile returns and outperformance relative to its benchmark over one, three, five and 10 years, it is easy to see why.
Source: FE Analytics
However, due to the fund’s performance and the popularity of Dean herself, the fund’s AUM have grown substantially recently. This meant that the group started to stem inflows into the fund in May last year.
Alastair Mundy, who is renowned for his contrarian/value approach, is still a firm favourite with fund of fund managers. Our data shows that 18 of them hold Investec UK Special Situations in their top 10.
There are also 18 funds that hold the Vanguard FTSE UK Equity Tracker in their top 10. It is the only passively managed portfolio to feature on the list, though, like with our IMA UK Equity Income study last week, five of the funds that hold it are Vanguard funds.
It has a tracking error of just 0.05 per cent over the last three years and it offers a miniscule ongoing charges figure (OCF) of 0.15 per cent. It also has a yield of 3.15 per cent.
The final three funds to feature on the list are JOHCM UK Opportunities, CF Lindsell Train UK Equity and Jupiter UK Special Situations, which are headed by John Wood, Nick Train and Ben Whitmore, respectively.
Train’s fund has tended to be the best performer out of the three, as it boasts top-quartile returns over one, three and five years. It is also one of only two portfolios that have beaten the sector average in each of the last five discrete calendar years.
There are 14 funds that count it as a top-10 holding, including FE Alpha Manager Toby Ricketts’ Margetts International Strategy fund and FE Alpha Manger Martin Gray’s CF Miton Special Situations Portfolio.
