Investors miss out on top-rated UK growth funds
More than half of the strongest IMA UK All Companies funds on a risk-adjusted return basis have less than £100m AUM.
The vast majority of FE five-crown rated funds in the IMA UK All Companies sector are ignored by the mass market, according to FE Trustnet
research, while many of its highest-profile portfolios have struggled.
Of the 28 top-rated funds in the sector, 17 have less than £100m assets under management (AUM), 11 of which have less than £10m AUM.
Only four funds on the list – AXA Framlington UK Select Opps
, Majedie UK Equity
, Investec Special Situations
and JOHCM UK Opportunities
– have more than £500m AUM.
FE Crown Ratings are a quant-based ratings system designed to highlight the funds that have produced consistently high returns on a risk-adjusted basis, relative to their peer group.
Selection of five crown-rated portfolios
Source: FE Analytics
The group of 17 includes the £62.4m MFM Slater Growth portfolio, which is headed up by FE Alpha Manager Mark Slater.
The fund is number-one in the sector over three- and five-year periods, with returns of 134.62 and 61.41 per cent respectively. Over three years, no portfolio in the entire unit trust and OEIC universe has returned more.
Despite its mid cap bias, Slater’s fund is only slightly more volatile than its sector average over both time periods, although it did underperform by around 8 per cent in the down market of 2008.
One of the standout performers in the risk-adjusted return standings is the IM Matterley UK Equity fund, which has just £8.4m AUM.
Chris Harris and Chris Evans’ portfolio is a top-quartile performer over five years with returns of 23.15 per cent, and is one of the least volatile funds of its kind.
Performance of funds vs sector and index over 5-yrs
Source: FE Analytics
The same can be said of Unicorn Outstanding British Companies, which has returned more than IM Matterley UK Equity over both time periods, but is slightly more volatile.
Even Liontrust's sector-leading Special Situations and UK Growth funds are relatively small, with around £550m AUM between them.
By contrast, some of the largest and more heavily marketed funds in the sector have disappointed of late.
Of the 16 funds with more than £1bn assets under management (AUM), only six have managed to beat the FTSE All Share index over three years, and only eight have outperformed over five.
Many of these funds are flagship portfolios for their respective groups, including the likes of Fidelity Special Situations, Artemis UK Special Situations and Schroder UK Mid 250, which has also vastly underperformed its FTSE 250 (ex ITs) index.