Standard Life Investment’s Thomas Moore, Hermes’ Gary Greenberg, and JOHCM’s Ben Leyland are among the fund managers to be awarded FE Alpha Manager status for the first time, according to latest annual rebalancing.
FE Research rebalances the FE Alpha Manager list annually and in 2016 there 39 new managers joining for the first ever time, meaning there is now a total 187 FE Alpha Managers, up from 182 last year, representing 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 flag the benefits of experience.
The rating is built on three main components: risk-adjusted alpha, consistency of outperformance versus the benchmark, downside protection and outperformance in both rising and falling markets. It assess performance throughout a manager’s entire career, across all the funds they have managed.
Mika-John Southworth, director at FE said: “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 – which is fundamental considering the market conditions we have been facing over the past year.”
In this article, we take a look a closer look at some of the most notable managers that have awarded FE Alpha Manager status for the first time.
Thomas Moore - Standard Life Investments UK Equity Income Unconstrained
Moore (pictured) has headed the £1.1bn Standard Life Investments UK Equity Income Unconstrained fund since 2009 as well as the Standard Life Equity Income Trust since 2011.
Moore usually has a portfolio of between 50 to 60 stocks, mostly in the FTSE 250 followed by the FTSE 100. He aims to find firms that have a low starting yield, so as to own them while they increase their dividends over the longer term.
Paying little attention to the benchmark – as the fund’s name suggests – has paid off for Moore. Standard Life Investments UK Equity Income Unconstrained is top decile over three and five years more than quadrupling the FTSE All Share’s gain over the former and tripling it over the latter.
Performance of fund, sector and index over 3yrs
Source: FE Analytics
Square Mile Research has a “high regard” for Moore’s investment process.
“For investors looking for a truly actively managed UK equity income strategy which pays little attention to the underlying benchmark then this strategy is most worthy of consideration,” Square Mile said.
“However, it must be noted that since Mr Moore has been at the helm he has not yet experienced a period of extreme market stress, such as in 2008.”
It has a current yield of 3.93 per cent and an OCF of 1.15 per cent.
Gary Greenberg - Hermes Global Emerging Markets
Greenberg, who is head of emerging markets at Hermes, has managed the $446m Hermes Global Emerging Markets fund since June2011.
The fund is top decile over three years with a return of 1.8 per cent – the third best in the IA Global Emerging Markets sector - and is one of just five portfolios in the 73-strong sector to be in positive territory in what has been a dire time for emerging markets.
Performance of fund, sector and index over 3yrs
Source: FE Analytics
AXA Wealth’s Adrian Lowcock is fan of Greenberg’s fund and thinks emerging markets look attractive.
“Greenberg’s good bottom-up stock-picking of companies in emerging markets has driven his fund’s performance, with a focus on companies which are embracing the new world and not fighting it,” he said. “The fund is concentrated, has a high active share and has reasonably long holding periods,” he recently said.
The fund has a clean ongoing charges figure of 1.13 per cent.
William Pattisson & Jeremy Lang
Pattisson and Lang have managed the £231m Ardevora UK Equity Income fund for just over five years.
The pair take a somewhat unique approach to stock selection. Rather than using a value or growth strategy, the managers look for holdings using cognitive psychology.
This is based on the belief that investors, managers, and analysts in financial markets are fundamentally disposed to making predictable mistakes as well as having inherent biases that generate opportunities.
Over three years the MGTS Ardevora UK Equity Income fund is top quartile and top decile over five years.
Performance of fund, sector and index over 3yrs
Source: FE Analytics
However, it has been more volatile than the IA UK Equity Income sector average and only marginally behind the FTSE All Share for this measure over the past three and five years.
The fund has a clean ongoing charges figure of 0.94 per cent.
Ben Leyland - JOHCM Global Opportunities
Last but not least is Ben Leyland (pictured), who heads up the £130m JOHCM Global Opportunities fund. The manager is also somewhat more unusual in his strategy mostly choosing to hold a large weighting to cash due to his focus on valuation.
Three years ago he had low single digits [about 7 per cent] in cash. This has gradually built up to about 17 per cent today.
This has not weighed on performance however. The fund is top decile over one and three years, and significantly ahead of the MSCI World index.
Performance of fund, sector and index over 3yrs
Source: FE Analytics
The fund has a clean OCF of 1.58 per cent and also charges a performance fee.
Other notable names in the list include: Johanna Kyrklund whose largest fund is the £5.2bn Schroder Diversified Growth (co-managed with Remi Olu Pitan), Tom Holl BlackRock Natural Resources Growth & Income and Amit Mehta who heads up JPM Emerging Markets Income.