Hidden gems of the fund management industry
FE Trustnet looks at a selection of funds whose residence in the Specialist and Unclassified sectors has caused their strong performance to pass the majority of investors by.
By Joshua Ausden, News Editor, FE Trustnet
Thursday June 07, 2012
Those who rely on IMA classifications when building their portfolio run the risk of missing out on some of the best-performing funds in the industry.
Some funds prefer not to be readily compared with their peer group because they are benchmark-driven, while others have yet to be allocated a sector by the IMA, and thus sit in the Unclassified sector.
Here is a selection of hidden gems you may wish to consider:
Standard Life Corporate Debt
and Roger Sadewsky’s
£419m portfolio, which sits in the Specialist sector, has one of the best records of any fixed interest fund in the industry.
According to FE data, it has returned 46.6 per cent over five years, a figure that has been beaten by only one portfolio in the Sterling Corporate Bond sector – Richard Woolnough’s M&G Strategic Corporate Bond fund.
It would also be a top-three performer in the Corporate Bond sector over three years, with returns of 63.33 per cent. Woolnough’s portfolio has returned 35.7 per cent over this period.
Moreover, both of the funds that have beaten Standard Life Corporate Debt over this period have returned significantly less over five years.
Performance of fund vs sector over 10-yrs
Source: FE Analytics
||1-yr returns (%)
|3-yr returns (%)
||5-yr returns (%)
||10-yr returns (%)
|Stan Life Inv Corporate Debt
|IMA Sterling Corporate Bond
Over a 12-month period, no Corporate Bond fund has come anywhere near to challenging Sutherland and Sadewsky’s returns of 22.59 per cent.
Standard Life Corporate Debt is, however, very unstable for a bond fund and has a significantly higher annualised volatility than the Corporate Bond sector's average. A score of 12 per cent over five years is almost as high as the average Sterling High Yield portfolio.
The fund has a minimum investment of £500 and a total expense ratio (TER) of 1.61 per cent. It is currently yielding 3.65 per cent.
Baillie Gifford Diversified Growth
Those looking for an alternative to the recently soft-closed Trojan fund may wish to consider Mike Brooks and Patrick Edwardson’s five crown-rated Baillie Gifford Diversified Growth portfolio.
Its performance since launch puts it firmly in the league of the very best performers across the four mixed asset sectors. According to FE data, the fund has returned 41.96 per cent since May 2009, almost double the returns of the four IMA mixed asset sector averages.
It has also been significantly less volatile than all but IMA Mixed Investment 0-35% Shares and has a lower FE Risk Score than the average (32) of these four sectors.
Performance of fund vs sectors since launch
Source: FE Analytics
As well as participating in the 2009 and 2010 QE-fuelled rally, the fund also protected effectively against the downside last year and, unlike the vast majority of its multi-asset rivals, managed to break even.
While most of the £1.46bn of the fund's AUM is institutional money, it is also available to retail investors. It has a minimum investment of £1,000 and a total expense ratio (TER) of 1.62 per cent.
CF Ruffer Pacific
While this portfolio cannot compete with the likes of Aberdeen and First State in terms of track record and consistency, the sparse number of options in the open-ended emerging market space means its popularity could soon begin to grow.
Aberdeen Emerging Markets has recently soft-closed and, with many expecting First State Asia Pacific Leaders
and Global Emerging Market Leaders to soon follow suit, a fund run by a house with the reputation of Ruffer – as well as an FE Alpha Manager at the helm – is well placed to pick up the slack.
While CF Ruffer Pacific invests predominantly in emerging markets, the £152m portfolio also has some exposure to Japanese equities, which make up 10 per cent of its holdings.
Performance of fund vs sector since October 2006
Source: FE Analytics
Since taking over as manager in October, Mary McBain
has returned 38.44 per cent, compared with 19.42 per cent from her MSCI AC Asia Pacific benchmark.
The fund is significantly less volatile than its benchmark and lost far less during the 2008 downturn.
It has a minimum investment of £1,000 and a TER of 1.59 per cent.