Given that we looked at the most consistent funds from the IA UK All Companies, Smaller Companies and Equity Income sectors in a recent article, we thought we would widen our search and highlight the funds from the other developed global equity sectors which have outperformed year-in year-out over the topsy-turvy last half a decade.
The standout statistic is that out of the IA Europe ex UK, Global, Global Equity Income, Japan and North America sectors – which are home to a combined 454 funds with a long enough track record – only six funds have managed to beat both their respective sector average and benchmark in each year between 2010 and 2014.
The only fund to achieve that feat in the IA Global sector – which is largest of the ones included in the study with 201 portfolios – is the five crown-rated Old Mutual Global Equity fund, which is headed up by Ian Heslop, Mike Servent and Amadeo Alentorn.
According to FE Analytics, it was a top quartile performer in 2010, 2011, 2012, 2013 and 2014, a period which includes various market conditions, and beat its MSCI World benchmark in each one of those years.
Source: FE Analytics
Those returns mean the fund has been top quartile over rolling one, three, five, seven and 10-year periods.
The £185m fund is a very diversified portfolio of more than 450 holdings and Heslop, Alentorn and Servent take a different approach to investing compared with many of their peers.
Instead of having either a value or growth bias in their fund, the managers attempt to create – using quantitative analysis – a more blended portfolio of stocks that can perform in any given market environment and this process has certainly worked over recent years.
There are a number of other funds from the IA Global sector which have come close to achieving consistent outperformance over the last five years, however.
For example, Mikhail Zverev’s Standard Life Investments Global Equity Unconstrained has been a second or first quartile performer in each of the last five calendar years, though its losses of 9.49 per cent in 2011 where slightly greater than the sector average’s – which is also its benchmark.
On the other hand, Artemis Global Growth, which is managed by Peter Saacke, has beaten the sector average in every year included in the study – turning in top quartile returns in 2010, 2012 and 2014 – but fell further than its benchmark in 2011.
The study also revealed that no funds from the IA Global Equity Income sector have made it onto the list of consistent outperformers, though given that there are only 14 funds which have track records spanning back to 2010, this isn’t too much of a surprise.
One which nearly did it is Nick Mustoe’s five crown-rated Invesco Perpetual Global Equity Income fund – which has a yield of 3 per cent and prioritises dividend growth.
The £756m fund, which had been managed by Paul Boyne and Doug McGraw until late 2012, was a top quartile performer in 2010, second quartile in 2011 and top quartile again in 2012 and 2013. However, its returns of 5.77 per cent last year were lower than that of the sector, which is also its benchmark.
The same can be said for Liontrust Global Income, as its bottom quartile losses in 2014 were the only reason it didn’t make it onto the list.
On a more positive note for active managers, the IA Europe ex UK sector is home to four funds which have beaten their sector and benchmark in each of the last five years – namely Henderson European Focus, Scot Wid HIFML European Strategic, Schroder European and JOHCM Continental European.
Following four consecutive bottom quartile years before FE Alpha Manager John Bennett took charge in February 2010, the five crown-rated Henderson European Focus fund has been top quartile in each of the last five calendar years except for 2013 when it was second quartile.
Nevertheless, it beat its benchmark – the FTSE World Europe ex UK index – in all of those years.
It means that, according to FE Analytics, the £340m fund has been a top decile performer for both its returns and maximum drawdown, which measures the most an investor would have lost if they had bought and sold at the worst possible times, over five years.
Performance of fund versus sector and index over 5yrs
Source: FE Analytics
The five crown-rated Scot Wid HIFML European Strategic fund also has a very enviable track record, as the £24m portfolio was a top quartile performer in each of the last five years except for 2010 and consistently beat its benchmark in each of those periods.
Martin Skanberg’s Schroder European fund and JOHCM Continental European, which is under the stewardship of Paul Wild, have also achieved the feat, though their returns have been slightly more in line with the wider market than the other two European funds mentioned thus far.
While the Schroder and JOHCM funds beat their respective benchmarks in every year between 2010 and 2014, they were second quartile performers in four of those years. Schroder European was top quartile in 2012, while JOCHM Continental European was top quartile in 2010.
Nevertheless, both sit firmly in the top quartile of the sector over a cumulative five-year period as the two funds have returned more than 45 per cent over that time.
Pictet Japanese Equity Opportunities is the only fund from the IA Japan sector to feature on the list, despite the fact the sector is littered with more renowned and popular funds run by groups such as Schroders, Baillie Gifford and Neptune.
The Luxembourg-domiciled SICAV was a second quartile performer in four of the last five years, only sitting in the top quartile in 2014. However, it narrowly outperformed its TOPIX benchmark in each of the last five years.
Source: FE Analytics
The fund’s management team of Serena Robinson, Adrian Hickey, Sam Perry and Takeshi Suzuki use the 130/30 management approach, which means combining a long strategy on 130 per cent of total assets with a short strategy on 30 per cent.
The US is known as being a very difficult place for active managers to outperform and therefore it comes as little surprise that no funds from the IA North America sector feature on the list of consistent funds.
The only actively managed portfolio which came remotely close to outperforming both the sector and its benchmark in each of the last five years is Janus Intech US Core.
Our data shows it was first or second quartile in each of the last five years, though it actually underperformed against the sector average in the strongly rising market of 2013. However, it failed to beat the S&P 500 in 2012 and 2014.