As a new year is beginning, FE Trustnet has put the list under the microscope to see which Select 100 funds have managed to beat the vast majority of their peers in 2014 and sit in their sector’s first decile over one year.
FE Analytics shows 16 of the 124 funds on the Select 100 made top decile returns in their respective sectors for their investors last year, while 34 are first quartile. Some 106 funds made a positive return, with the bulk of those that lost money tended to outperform their average peer.
Source: FE Analytics
The strongest of the Select 100’s first decile performers is FE Alpha Manager Angus Tulloch and Richard Jones’ £7.8bn First State Asia Pacific Leaders fund, which was up 19.07 per cent in 2014.
It achieved this gain while being less volatile than the average IMA Asia Pacific ex Japan fund and its MSCI AC Asia Pacific ex Japan benchmark.
Asian equities generally had a tough 2014, with the MSCI AC Asia Pacific ex Japan index gaining just 0.60 per cent.
Investor sentiment towards risk assets was weak due to a number of factors, such as the prospect of higher interest rates and geo-political risk, although a number of Asian economies are expected to benefit from lower oil prices.
First State is one of the leading asset management houses when it comes to emerging markets and the five FE Crown-rated fund is first decile over five and 10 years also.
Since launch in December 2003, the fund is the second best performer in the sector, with only First State Asia Pacific, which Tulloch runs with fellow FE Alpha Manager David Gait, beating its 376.26 per cent return.
Performance of fund vs sector and index since launch
Source: FE Analytics
The FE Research team highlights the cautious stance of the managers, which helps to differentiate them from most funds investing Asian equities and contributes to long-term returns.
“The managers’ ability to protect capital is rated as one of its greatest attributes and has led to the portfolio rightly gaining a reputation as one of the most stable in the Asia Pacific market,” the team said.
First State Asia Pacific Leaders has a clean ongoing charges figure (OCF) of 0.89 per cent.
As the table above shows, First State also manages the second best performing fund out of the Select 100’s winners thanks to the 18.69 per cent return made by the £1.1bn First State Global Listed Infrastructure fund. This compares with a 7.09 per cent gain from the average IMA Global fund.
Attention on infrastructure has been growing in recent years as investors continue to seek income and diversify away from mainstream holdings in equities and bonds. The fund was launched in 2008 and since then has returned 74.96 per cent against the 38.31 per cent sector average.
The FE Research team points out that the fund has a good record of protecting investor capital and benefits from long-term drivers in the listed infrastructure market, but says investors should view it as a specialist investment product rather than a typical global equity fund.
First State Global Listed Infrastructure has a 0.83 per cent clean OCF and yields 2.41 per cent.
FE Alpha Manager Mark Martin’s £338m Neptune UK Mid Cap fund had another strong year, even if its asset class had a rough ride. It made 11.86 per cent in 2014, smashing the IMA UK All Companies average return of 0.64 per cent and making it the sector’s third best performing fund.
Mid-caps faltered at the start of the year as investors took profit following the area’s recent stellar returns. The FTSE 250 lagged the FTSE 100 for most of 2014 but ended the year up 2.79 per cent, compared with a 0.74 per cent rise in the large-cap index.
Martin runs a concentrated portfolio that is split into three groups: recovery, structural growth and self-help stories.
It has enjoyed a barnstorming five years with its 153.48 per cent return being close to 50 percentage points higher than the FTSE 250’s and almost 100 percentage points higher than the sector average.
Performance of fund vs sector and index over 5 years
Source: FE Analytics
Neptune UK Mid Cap has clean ongoing charges of 0.81 per cent.
The Select 100’s top decile performers also show a number of familiar names. FE Alpha Manager Mark Barnett has two places on the top 10 owing to the 10.42 per cent return of his Invesco Perpetual UK Strategic Income fund and Invesco Perpetual Income’s 9.04 per cent gain.
Ian Spreadbury and Michael Clark’s Fidelity Moneybuilder Balanced also appears, as do Christopher Metcalfe’s Newton Managed and Francis Brooke’s Trojan Income funds. Spreadbury, Metcalfe and Brooke are all FE Alpha Managers.
Looking outside the top 10 and FE Analytics shows Edward Lam’s PFS Somerset Emerging Markets Dividend Growth, Nick Train’s CF Lindsell Train UK Equity, Alexander Darwall’s Jupiter European and Giles Hargreave’s Marlborough Special Situations funds are in the first decile of their respective sectors.
All of the above individuals hold FE Alpha Manager status.
A special mention has to go to the CIS Sustainable World fund, which is headed by FE Alpha Manager Mike Fox. The five crown-rated fund achieved first-decile returns of 10.16 per cent in 2014 - marking the fourth consecutive year it has been in the top 10 per cent of its IMA Mixed Investment 40%-85% Shares sector.
FE Trustnet recently put the £134.1m fund under the spotlight, where we highlighted the fund’s track record in beating its peers while running the portfolio to meet a combination of both investment performance and social responsibility objectives.
The below graph shows how well the fund has done since launch in September 2009. It’s benchmarked against the sector, but as a point of comparison we have also shown its outperformance against the FTSE All Share.
Performance of fund vs sector and index since launch
Source: FE Analytics
CIS Sustainable World has a clean OCF of 0.80 per cent.
