Yesterday, FE Trustnet looked at the five of the portfolios that have won a place on the elite list – including Jamie Seaton’s GVO UK Focus and Chris Reid and Yuri Khodjamirian’s Majedie UK Income funds.
In the following article, however, we reveal five of the funds that have lost their place on the Select 100.
Schroder UK Opportunities
The Schroder UK Opportunities fund has faced a rough time recently, after it went from being one of the IA UK All Companies sector’s stars to a fourth quartile performer. Star manager Julie Dean also resigned in September 2014 while the fund has gone from £2.8bn in size in February 2014 to £834m today.
Over 10 years the fund is a top decile performer with a total return of 188.53 per cent, ranking it eighth out of 178 portfolios in the peer group. However, it is bottom decile over one year with a loss of 2.80 per cent compared with positive returns from both the sector and its FTSE All Share benchmark.
Performance of fund vs sector and index over 1yr
Source: FE Analytics
The FE Research team said: “Over the last 12 months both previous manager Julie Dean and current manager Matt Hudson have made calls which have been detrimental to the fund’s performance and have led us to downgrade the fund to a one crown rating.”
“This difficult period has thrown up some doubts about the fund’s continued presence in the shortlist and we have therefore placed a sell rating on the fund.”
Other IA UK All Companies funds on the Select 100 include Nigel Thomas’ AXA Framlington UK Select Opportunities, Mark Barnett's Invesco Perpetual Income, Nick Train’s CF Lindsell Train UK Equity and Anthony Cross and Julian Fosh's Liontrust Special Situations.
Fidelity Moneybuilder Balanced
FE Alpha Manager Ian Spreadbury has managed this £483.9m fund since August 1995 and was joined by UK equity income manager Michael Clark in December 2009. The fund aims for “an attractive level of income” along with long-term capital growth through investing in UK bonds and stocks.
Over Spreadbury’s time on the fund it has returned 184.68 per cent, against an IA Mixed Investment 40-85% Shares average of 122.62 per cent and 146.85 per cent rise in its composite benchmark, which is a 65/35 split between the FTSE All Share and FTSE All Stocks indices.
However, Fidelity Moneybuilder Balanced was recently downgraded from five FE Crowns to three in the latest rebalancing of the ratings. FE Crowns are quantitative ratings that seek to identify superior performance in terms of stock picking, consistency and risk control.
“Having reviewed this decision and analysed the longer-term performance of the fund we feel there are now better alternatives in this asset class,” the FE Research team said.
There are currently a number of IA Mixed Investment 40-85% Shares members on the Select 100, including David Ballance and Steve Russell's CF Ruffer Total Return, Paul Causer, Paul Read and Ciaran Mallon's Invesco Perpetual Distribution and John Chatfeild-Roberts and Algy Smith-Maxwell's Jupiter Merlin Income Portfolio funds.
CF Ruffer Equity & General
CF Ruffer Equity & General, headed by FE Alpha Manager Alex Grispos, is another fund that suffered a downgrade in the recent FE Crown rebalancing.
Grispos has managed the fund since March 2007, over which time it has significantly outperformed the sector and its FTSE All Share benchmark with a 96.66 per cent return.
Over one year, the £214.5m fund is up just 1.71 per cent and sits bottom decile in the IA Flexible Investment sector, where the average return has been 8.82 per cent. This makes it the second worst performer in the 131-strong peer group.
Performance of fund vs sector and index over 1yr
Source: FE Analytics
“Following a year of very poor performance the fund has been downgraded from a maximum five FE Crown rating to two. In light of this we have decided to place a sell rating on the fund,” the FE Research team explained.
The fund’s short-term underperformance can partly be explained by its avoidance of bonds and preference of cash to balance risk. The weighting to cash is currently around the 38 per cent mark.
Only two other IA Flexible Investment funds are found on the Select 100: Chatfeild-Roberts and Smith-Maxwell’s Jupiter Merlin Growth Portfolio and Christopher Metcalfe’s Newton Multi-Asset Growth.
GAM North American Growth
Gordon Grender, a FE Alpha Manager, has helmed the £342.1m GAM North American Growth fund since launch in November 1985, over which time it’s returned more than 3,300 per cent. Over ten years the fund has returned a first-quartile 171.82 per cent while the S&P 500 has risen 153.95 per cent.
However, the fund slips into the second quartile on a five-year view and into the third quartile over three years. It now sits in the bottom quartile over one year with a return of 15.45 per cent, representing an underperformance against the benchmark of almost 10 percentage points.
Performance of fund vs sector and index over 1yr
Source: FE Analytics
The FE Research team said: “The fund has seen its crown rating downgraded in the last two rebalances and now stands at just one. Having reviewed our other US holdings we are confident that there are better alternatives and that this fund no longer warrants a place on the Select 100.”
Grender tends to either reside in the first or bottom quartile of the IA North American sector. Its returns were first quartile in 2012, 2011, 2010, 2008 and 2005 but it was fourth quartile in 2014, 2013, 2009, 2007 and 2006.
Clare Hart and Jonathan Simon’s JPM US Equity Income and Jenny Jones' Schroder US Mid Cap are the only two funds from the peer group remaining on the Select 100.
GLG Japan Core Alpha
Stephen Harker’s £1.5bn GLG Japan Core Alpha was a full member of the Select 100 but its membership was placed on hold at a previous rebalancing. The fund has a decent track record – it’s second quartile over three and five years – but the FE Research team believes better opportunities can be found in the sector.
“The fund has held a hold rating for a year and we do not see any prospect of it being upgraded in the near future. As there are already several high quality Japanese funds on our shortlist we believe it is sensible to place a sell rating on the fund.”
GLG Japan CoreAlpha takes a contrarian approach and looks for companies that are out of favour with the wider market, meaning that it can go through periods of underperformance. Last year, for example, the fund made 0.40 per cent while its Topix benchmark was up 2.39 per cent.
The Select 100 members from the IA Japan sector are Sarah Whitley and Matthew Brett’s Baillie Gifford Japanese and Chris Taylor’s Neptune Japan Opportunities funds.
