With those signs of optimism, FE Trustnet focused on more cheery issues such as the relatively unknown fund managers with stellar long-term track records and why Invesco Perpetual’s Martin Walker is optimistic about the outlook for cyclicals.
We also updated you on the progress of our income transparency campaign, revealing that two groups have pledged to include more dividend information on their factsheets while a number of others are reviewing the information they offer investors.
Here’s our pick of the best stories of the week. From all of us at FE Trustnet, have a great weekend.
Five star managers you have never heard of
Ask most people to name a ‘star’ manager and the same old favourites will get trotted out - you’ll hear Neil Woodford, Richard Buxton, Angus Tulloch and the like easily roll off the tongue.
While not looking to play down these managers’ notable achievements, FE Trustnet senior reporter Alex Paget when on the hunt for others who have delivered strong returns over many years while not seeing their assets swell on the back of sustained inflows.
The first manager highlighted was FE Alpha Manager Andrew C Green, who has managed the £280m GAM UK Diversified fund since August 1990 and launched his five crown-rated GAM Global Diversified fund in January 1984.
Performance of fund vs index since Jan 1984
Source: FE Analytics
GAM Global Diversified has returned 3,663.85 per cent -beating its MSCI World benchmark by 2,349.11 percentage points in the process.
His UK fund has returned 1,756.58 per cent since its launch in August 1990 and has more than tripled the FTSE All Share’s gains over the period.
Others managers from Unicorn Asset Management, McInroy & Wood, GAM and Ruffer were also highlighted in Paget’s five little-known star fund managers.
The only two UK funds that have maintained income payouts over the full market cycle
As part of FE Trustnet’s campaign for more income information, we took a look at the IMA UK Equity Income sector to identify funds that have managed to maintain or increase their dividends over the seven years of the last market cycle.
Our research identified just two members of the sector that have be able to pay out more income in each of the six full calendar years covered by the study - FE Alpha Manager Francis Brooke’s Trojan Income and Adam Avigdori and Mark Wharrier's BlackRock UK Income funds.
Another nine have maintained or grown their income in five of the six years analysed, including Adrian Frost and Adrian Gosden’s Artemis Income, Michael Clark’s Fidelity Moneybuilder Dividend, Clive Beagles and James Lowen's JOHCM UK Equity Income and Carl Stick’s Rathbone Income funds.
The FE Trustnet income campaign has received broad support from the investment community, with several groups reviewing the information presented on their fact sheets.
Next week, we will continue to push for more transparency and progress with our series of studies on income-paying funds.
The passives that stood up to their active rivals in the correction
Markets have just come out of a six-week sell-off which saw most equity funds walk away with losses and many would have expected passives to have borne the brunt of these.
However, FE Trustnet reporter Daniel Lanyon identified several trackers that compare well to their active rivals over the course of the correction as well as achieving some good long-term numbers.
Performance of fund, sector and index since June 2009
Source: FE Analytics
The £622m Vanguard FTSE UK Equity Income Index tracker stood out in the popular IMA UK Equity Income sector, after losing 9.2 per cent during the sell-off.
High as this seems, it still beat two-thirds of sector, where the average fund lost 9.53 per cent.
Lanyon also took a look at the IMA UK All Companies and North America sectors, identifying trackers in each that had outperformed most of their peers.
Invesco’s Martin Walker: Why I’ve maxed out my ISA with my UK Growth fund
In an exclusive interview with FE Trustnet, Invesco Perpetual’s Martin Walker told editor Joshua Ausden why he has maxed out his ISA with an investment in his own £1.1bn Invesco Perpetual UK Growth fund.
Walker says the recent sell-off has made cyclical stocks look particularly attractive and he has strong exposure to these companies in his fund.
The manager significantly upped his positioning in cyclicals in late 2011. Since then, Invesco Perpetual UK Growth has returned 61.22 per cent since September 2011 compared to 39.45 per cent from the IMA UK All Companies sector average.
“I’m really optimistic,” he said. “Because of the way the market has performed this year, if you look at a basket of defensives and a basket of cyclicals, the relative value is as stretched as it was in 2011 during the eurozone sell-off and not far off what we saw in 2009.”
“I would be delighted to hide in low-risk stocks but the valuations just aren’t supportive.”
Performance of fund, sector and index since Sept 2011
Source: FE Analytics
Beware “extremely expensive” bond market, warns Brookes
While equities have sold-off quite significantly over the last two months, government bonds – such as gilts and treasuries – have acted like real safe-haven assets once again.
Yields have fallen since the start of the year, which has caught out the vast majority of experts.
However, at their current yields of around 2 per cent, FE Alpha Manager Marcus Brookes told FE Trustnet why he would keep a very high weighting to cash instead of dipping into the market because – at the current prices – bondholders are likely to be hit with capital losses.
“We believe that the US and UK treasury markets are extremely expensive,” Brookes said. “We believe the recent strength is due to safe haven buying whilst equities are weak, but once this theme runs its course perhaps the shock will be how weak these securities will be.”
He added: “Thus the only alternative for us remains cash instead of government bonds.”
