The likes of Neil Woodford, Richard Buxton, Angus Tulloch, Alexander Darwall and Richard Woolnough fit into this category due to their returns over the years and they all run billions of pounds as a result.
However, as we show in this article, there are a number of managers who delivered similarly strong return profiles over the years and, though they have been running money for a long time, they have largely fallen under the radar of most investors.
Andrew C Green
FE Alpha Manager Andrew C Green is a good example. He has managed the £280m GAM UK Diversified fund since August 1990 and launched his five crown-rated GAM Global Diversified fund in January 1984.
While both funds have delivered second quartile returns in their respective IMA sectors over five and 10 years, and therefore may look mediocre to some investors, Green has delivered stellar returns over the longer term.
According to FE Analytics, his £566m Global Diversified fund has returned 3,663.85 per cent since he launched the portfolio.
While the fund has been more volatile, it has beaten its benchmark – the MSCI World index – by 2,349.11 percentage points over that time.
Performance of fund vs index since Jan 1984
Source: FE Analytics
His UK fund has returned 1,756.58 per cent since its launch in August 1990, making it the best performing fund out of the 31 IMA UK All Companies funds that have a long enough track record – including Neil Woodford’s former Invesco Perpetual High Income fund – and has more than tripled the FTSE All Share’s gains over the period.
Green is a value investor and looks to exploit areas with excessively negative sentiment and companies that have a catalyst for change.
It means that his GAM UK Diversified fund holds out-of-favour stocks such as Royal Bank of Scotland and Barclays in its top 10.
Chris Hutchinson
While he doesn’t have as long a track record as Green, FE Alpha Manager Chris Hutchinson, who manages the Unicorn Outstanding British Companies fund, has been of the best performing managers in the UK space over the years.
Unicorn, as a group, has been in the news a lot this year due to the untimely death of their star manager John McClure.
While McClure rightly received high praise for the performance of his Unicorn UK Income fund, Hutchinson – who is a director at the group – has also delivered market-beating returns since he launched his £20m portfolio in December 2006.
Unicorn Outstanding British Companies has been the ninth best performing portfolio in the IMA UK All Companies sector over that time with returns of 102.42 per cent.
Its FTSE All Share benchmark has returned 41.72 per cent over the period.
His fund is a multi-cap portfolio, like the other Unicorn funds, but will tend to have a higher weighting to FTSE 250 and FTSE 100 names.
That is because Unicorn’s ideal plan for a stock is to buy it in their AIM VCT, watch it grow into their UK Smaller Companies fund and then eventually end up in Hutchinson’s Outstanding British Companies portfolio.
Tim Wood
If investors want to add a little risk to their portfolio, they may want to consider the McInroy & Wood Global Smaller Companies fund, which has been headed-up by FE Alpha Manager Tim Wood since March 2001.
Though the fund is still sub-£60m, it has been the second best performing portfolio in the highly competitive IMA Global sector since launch 297.15 per cent.
While you would probably expect a small-cap fund to outperform a sector which is largely made up of mega-cap funds, it has also comfortably beaten the MSCI World Small-Cap index over that time as well.
Performance of fund vs sector and index since Mar 2001
Source: FE Analytics
It also boasts top decile returns, and has beaten the index, over 10 years. It has beaten the index in all but one of the last 10 calendar years, which was during the falling market of 2011 when it lost 10 per cent.
Wood runs a benchmark-agnostic portfolio. His largest regional weightings are the UK, Europe and North America which make-up 37 per cent, 29 per cent and 28 per cent respectively of his fund.
Anthony Smouha
One of the major problems facing bond investors is that, given the uncertain outlook for fixed income assets as interest rates rise and economies recover, they want managers who are experienced enough to deal with a potential bear market in the asset class.
Unfortunately, however, the large majority of experienced – and top performing – bond managers now run very large portfolios as a result of their strong track records.
One who isn’t in that category, however, is FE Alpha Manager Anthony Smouha – who has run fixed income portfolios since 2000. Smouha, who works for GAM, has returned 264.44 per cent to his investors over that time, beating his peer group composite which has returned 92.57 per cent.
He is a relative newcomer to the IMA universe, however, launching his £130m GAM Star Credit Opportunities fund in July 2011.
While it is over a relatively short period of time, it has been the best performing portfolio in the 61-strong IMA Sterling Strategic Bond sector over that time.
It was the sector’s best performing fund in 2012, 2013 and is the third best performer so far in 2014.
Smouha has come onto a number of fund researchers’ radars recently, with SG Wealth’s Neil Shillito and The Share Centre’s Andy Parsons both using the fund due to his track record and the nimble size of his portfolio.
The manager currently favours buying higher yielding bonds. However, he focuses on lower rated credit issued by investment credit to mitigate the risk of default.
Alex Grispos
The final name on the list is FE Alpha Manager Alex Grispos. He has the shortest track record out of the five managers highlighted, but has still run money through bull and bear markets having launched his five crown-rated CF Ruffer Equity & General fund in March 2007.
The fund sits in the IMA Flexible sector, but Grispos only invests in equities and cash.
However, the manager wants a greater degree of flexibility than the regular IMA Global sector member due to his innovative process, which is to build up his cash weighting as markets rise and then put that to work when he sees a sufficient enough fall.
An example was in 2008 when cash made up 60 per cent of the fund and in early 2009 he was 90 per cent invested in equities. This process has worked well for him so far.
The £220m CF Ruffer Equity & General fund has returned 87.37 per cent since Grispos has been in charge, doubling the returns of its FTSE All Share benchmark.
Performance of fund v index since Mar 2007
Source: FE Analytics
It made 7.33 per cent in 2008 when the index fell 30 per cent and returned 4 per cent in 2011 when the index lost 4 per cent.
This means it has a maximum drawdown, which measures how an investor would have done if they had bought and sold at the worst possible time, of 13.39 per cent.
The FTSE All Share’s max drawdown has been 45 per cent over that time.
Grispos runs a global portfolio and his largest regional weightings are North America (25 per cent), the UK (22 per cent) and Europe (10 per cent).
As of his most recent factsheet, Grispos holds 36 per cent in cash.
