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The invincibles: Find out who made the FE Alpha Manager “hall of fame”

03 February 2015

Following the recent rebalancing, FE Trustnet takes a closer look at the individuals who have kept their FE Alpha Manager status every year since the rating started 2009.

By Alex Paget,

Senior Reporter, FE Trustnet

There are 30 fund managers who have retained their FE Alpha Manager status in every year since the ratings started in 2009 and, while the list is littered with household names, there are some who will have gone under the radar of most investors over this time.

As FE Trustnet highlighted last week, the new list of FE Alpha Managers is available and no less than 182 individuals now hold the rating, which marks the top 10 per cent of managers running funds available to UK retail investors. 

The FE Alpha Manager ratings are designed to highlight talent, skill and experience and managers are judged according to their track records since 2000, with extra weighting for those with the longest track records to reflect the benefits of experience.  

The rating is based on three main components: risk-adjusted alpha, consistency of outperformance versus the benchmark and outperformance in both rising and falling markets.

Therefore Rob Gleeson, head of FE Research, says the managers who have retained the coveted rating in each of the last seven years deserve all the plaudits they receive.

“The managers who are entering our hall of fame, the likes of Neil Woodford, Angus Tulloch and Mark Slater, are a real testament to the power of conviction. These are managers who have tried and tested strategies and don’t get swayed by short-term events,” Gleeson (pictured) said.

“While their funds will have ups and downs, the fact that they have been consistently rated as the best managers in their fields for the last seven years since we launched the Alpha Manager rating goes to show the value of long-term investing.”

“The purpose of the Alpha Manager rating is to take a step back and remove short-term market movements or cyclical factors from the analysis. It allows us to identify the managers who can add value over time.”

The UK has the largest number of ‘hall of fame’ members, as the IA UK All Companies, Smaller Companies and Equity Income sectors are home to no less than 13 managers who have held FE Alpha Manager status in each of the last seven years.

Names such as Neil Woodford, Giles Hargreave, Harry Nimmo and Andy Brough are on the list and are well known, but there also others whose outperformance has gone largely unnoticed by the investment community.

One of which is Andrew C Green at GAM, who has managed his £330m UK Diversified since August 1990.

Performance of fund versus sector and index since Aug 1990

   
Source: FE Analytics 


While the fund’s record over one, three, five and 10 years hasn’t been spectacular, our data shows that since Green launched the fund, it has nearly trebled the gains of the FTSE All Share with returns of 1,853 per cent.

There are others such as John Wood who, though his JOHCM UK Opportunities fund is £1.5bn, doesn’t attract a huge amount of attention largely due to the fact he doesn’t particularly like talking to the press.

Nevertheless, his fund has not only comfortably outperformed both the IA UK All Companies sector and FTSE All Share since its launch in November 2005, it has been one of the best for preserving capital.

It was top decile in 2008 as Wood limited losses to 18 per cent when the wider market fell 30 per cent, top decile in 2011 with returns of 4.26 per cent when the sector fell 7 per cent and top quartile again in last year’s difficult conditions.

All told, it means JOHCM UK Opps has been among the top 15 funds in the 195-strong sector for its annualised volatility, downside risk, risk adjusted returns as measured by the Sharpe ratio and maximum drawdown, which measures the most an investor would have lost if they had bought and sold at the worst possible times, since its launch.

Other lesser known ‘hall of fame’ members include Leigh Himsworth, who currently runs the Fidelity UK Opportunities fund, and Franklin’s Ben Russon and Mark Hall.

The Investment Association’s two continental European sectors have five FE Alpha Manager stalwarts, which is an impressive feat considering that Europe has been the perennial source of bad news for global markets over recent years.

Nevertheless, David Dudding and Philip Dicken at Threadneedle, Argonaut’s Barry Norris, Rob Burnett of the Neptune European Opportunities fund and Richard Pease – who recently left Henderson to join Crux Asset Management – have all never lost their ratings.

Turning to the multi-asset space, popular managers Crispen Odey, Newton’s Iain Stewart and the Jupiter Merlin team of John Chatfeild-Roberts and Algy Smith-Maxwell are all members of the ‘hall of fame’, but they are also joined by the lesser-known, but equally as long-serving, Victor Wood of McInroy & Wood.

Wood has managed his £440m McInroy & Wood Balanced fund – which is traditional mixed asset portfolio of equities, bonds and cash – for nearly 25 years.

Our data shows that over 10 years the fund, which sits in the IA Mixed Investment 40%-85% sector, has beaten the FTSE All Share by more than 40 percentage points but has been half as volatile as the UK equity market and has had half its maximum drawdown over that time.

Performance of fund vs sector and index over 10yrs



Source: FE Analytics 

McInroy & Wood has also beaten the sector in 10 out of the last 15 calendar years.

Robin Hepworth, who heads up five funds at Ecclesiastical including the Ecclesiastical Higher Income fund which he has managed since 1994, has also been an FE Alpha Manager in each of the last seven years. Since the turn of the century, Hepworth has returned 174.13 per cent, beating his peer group composite by close to 100 percentage points in the process.

In the fixed income world, only Fidelity’s Ian Spreadbury and M&G’s Richard Woolnough have made it onto the list while First State’s Angus Tulloch and Martin Lau are the only two ‘hall of fame’ members in the emerging market space.

While it is frequently claimed that the US is a notoriously difficult place for active managers to justify their often high ongoing charges, there are two FE Alpha Manager stalwarts from the IA North America sector; namely Gordon Grender and Jenny Jones.

While neither manager has beaten the wider market year-on-year, they both delivered long-term outperformance to their investors.


According to FE Analytics, while Grender’s £340m GAM North American Growth fund has struggled over the last two years, it has been the sector’s best performing portfolio over 15 years with returns of 234.74 per cent.

More importantly, however, the fund has beaten the S&P 500 by more than 150 percentage points over the period.

Performance of fund vs sector and index over 15yrs



Source: FE Analytics 

Jenny Jones, who heads up the Schroder US Smaller Companies and Schroder US Mid Cap funds, has also considerably outperformed over the longer term.

Her £1.1bn Schroder US Mid Cap fund has been the IA North America sectors best performer – and has beaten its Russell 2000 benchmark by 20 percentage points – over 10 years with returns of 209.95 per cent.


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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.