Dr Guy Morrell was named FE Alpha Manager of the Year at last night’s FE Alpha Manager awards for the consistent outperformance of his five crown-rated HSBC Open Global Property fund.
The award was presented to the manager at a ceremony held at London City Hall, which also celebrated the achievements of 15 other FE Alpha Managers in a bid to identify the top-performers across different sectors within the active fund management industry.
HSBC Open Global Property is a fund-of-funds which holds the likes of Aberdeen Property Trust, M&G Property Portfolio and HSBC Global Real Estate Equity.
Morrell looks at property on a global basis to maximise diversification and will hold investment vehicles that consist of both direct and listed property to achieve a high risk-adjusted return.
This process has clearly worked well for the manager as, since the fund’s launch, it has more than tripled the performance of the popular IA Property sector’s average with a total return of 67.8 per cent.
Performance of fund vs sector since launch
Source: FE Analytics
It has achieved this performance while maintaining a top-decile risk-adjusted return, as measured by its Sharpe ratio, and a top-decile alpha ratio, which measures returns made in addition to the benchmark.
The five crown-rated fund is favoured by the FE Research team for the fact that it buys liquid holdings, has a diversified approach to fund selection and the manager can define the right investments themes at the right time.
“FE appreciates the fund’s approach as, in keeping with HSBC’s global philosophy, it offers exposure to property markets across the world, not just in the UK,” it said.
“Furthermore, its preference for investments that are easy to sell means it can react quicker to changing conditions.”
As mentioned earlier though, Morrell wasn’t the only star manager to leave triumphant last night.
The winning manager for UK equities was Dan Nickols, who has navigated his Old Mutual UK Smaller Companies through Brexit fears and a subsequent aversion towards domestic-facing stocks from many investors over the last year to outperform both its benchmark and its sector average.
It has also done well over the longer term, with the team focusing on the wider macroeconomic environment as well as bottom-up stock selection.
Performance of fund vs sector and benchmark over 5yrs
Source: FE Analytics
In the UK Smaller Companies Category, Philip Rodrigs was winner for his R&M UK Equity Smaller Companies fund, which uses a quant system called ‘MoneyPenny’ which can identify the companies that should be looked at closely and the best time to buy into them.
Over five years, the fund has doubled the performance of its sector average and more than tripled its Numis Smaller Companies + AIM Excluding AIC Companies benchmark.
Over in the UK Equity Income space this year, managers have had to navigate the fine line between buying expensive, dividend-paying stalwarts or ‘bond proxies’ and companies that provide income but are at risk of default or have weak balance sheets.
The manager rewarded for best achieving this was Neil Woodford, who of course heads up CF Woodford Equity Income fund, which currently holds 110 stocks and is able to invest across the cap spectrum to deliver both strong growth and income.
Despite Europe’s weak financial sector and fears surrounding the warped environment created by the ECB’s use of QE, Jupiter’s Alexander Darwall has delivered a strong total return over the last year and over the longer term, scooping the prize for best European equity manager.
In reference to his Jupiter European fund, the FE Research team said: “Darwall has built up an impressive track record in European equity investing, and this strategy and style of buying high-quality global companies has now weathered a number of market environments.”
The winner of best international equity fund manager was Barry Norris, whose Argonaut European Alpha fund has consistently outperformed the Europe ex UK market over the manager’s tenure through his concentrated ‘best ideas’ portfolio and the fact he isn’t afraid to stray from the benchmark.
The winner in the Asia Pacific category was David Gait for the performance of his portfolio, which includes Stewart Investors Asia Pacific Sustainability and Stewart Investors Asia Pacific Leaders. On average, the manager has outperformed his peer group composite by more than four times over the last five years.
Performance of manager vs composite over 5yrs
Source: FE Analytics
Over in the US equity space, Steve Berexa took home the prize for best manager with his Allianz US Equity fund, which invests in US large-caps that are deemed as having good prospects for increasing profits while trading on attractive valuations.
David Crawford, who runs City Financial Absolute Equity, was the winning manager within the absolute return space for his fund’s significant outperformance versus its peers. Over five years it has managed to triple the performance of the FTSE All Share using its long/short mandate. This performance puts it in sixteenth place out of the 3,526 funds within the Investment Association universe.
Despite the tough time that emerging markets have endured recently due to the collapse in commodity prices and a slow recovery from the financial crisis, Fidelity’s Nick Price has managed to navigate torrid market conditions and scoop the prize within the space for his Fidelity Emerging Markets fund.
Within the multi-asset space, Jupiter’s Alastair Gunn won with his Jupiter Distribution fund, which he manages alongside Rhys Petheram. While Gunn manages the equity part of the portfolio, Petheram manages the fixed income holdings.
“Investors should profit from this situation as the two co-managers are young and talented individuals in their respective areas,” the FE Research team said.
“As an illustration, Gunn and Petheram were appointed managers of the Jupiter High Income fund in 2013, a promotion that highlights the strength of their partnership. The High Income fund has a stronger focus on income generation.”
Last year’s FE Alpha Manager of the Year Richard Woolnough scooped the prize for best in bonds, having had to cope with treacherous market conditions for fixed income caused by unusually loose monetary policy, which has led to a sparsity in yield and high valuations across the asset class.
The award for best manager in a bull market was given to Paul Spencer, who co-runs the five crown-rated Franklin UK Smaller Companies fund alongside Richard Bullas. The fund focuses on risk-adjusted returns and holds a balanced portfolio consisting of three buckets – high-quality growth, under-valued & overlooked and cyclical & recovery.
In contrast, the award for the best manager in a bear market was picked up by Henderson duo Luke Newman and Ben Wallace, whose Henderson UK Absolute Return fund has outperformed the FTSE All Share over five years with just a fifth of the annualised volatility.
Performance of fund vs index over 5yrs
Source: FE Analytics
Majedie’s Chris Reid took the prize for best boutique manager, with his UK Income fund achieving a top-decile total return over three years.
“Since mid-2013 the return from stock selection has been very strong for the fund. In addition to its cheap price, the fund’s recent performance explains its success with investors,” the FE Research team said.
The winner of the award for new FE Alpha Manager was Rupert Fleming, who has run the Smith & Williamson Enterprise fund since its launch. The fund sits in the Targeted Absolute Return space and aims to achieve positive returns on a rolling 12-month basis.