More than 80 per cent of its funds are either first or second quartile in their sector over three, five and 10 years. A number of top-rated portfolios – including the likes of Invesco Perpetual UK Strategic Income and Invesco Perpetual Global Smaller Companies – achieved the feat over all three time periods.
Arguably the surprise package in the study was Baillie Gifford, which came second to Invesco Perpetual over three, five and 10 years. It beat off competition from much higher-profile groups such as Fidelity, M&G and Aberdeen.
Performance of fund houses
| Fund House | Number of funds managed | % of 1st or 2nd quartile funds over 10yrs | % of 1st or 2nd quartile funds over 5yrs | % of 1st or 2nd quartile funds over 3yrs |
|---|---|---|---|---|
| Invesco Perpetual | 44 | 85.7 | 81.1 | 86.4 |
| Baillie Gifford | 33 | 83.3 | 75 | 78.6 |
| M&G | 52 | 75.8 | 56.1 | 51.1 |
| Jupiter | 39 | 73.1 | 62.5 | 58.8 |
| Blackrock | 61 | 71.4 | 47.1 | 47.3 |
| Threadneedle | 76 | 69.2 | 63.3 | 60.2 |
| Fidelity | 78 | 68.4 | 71.7 | 66.1 |
| Schroders | 62 | 65.7 | 71.7 | 58.1 |
| Aberdeen | 36 | 56.5 | 70 | 58.1 |
| Standard Life | 64 | 55.5 | 53.1 | 51.4 |
| Investec | 39 | 54.4 | 64.5 | 45.4 |
| Henderson | 89 | 51.1 | 53.9 | 53.6 |
| JPM | 73 | 45 | 43.6 | 53.9 |
| AXA IM | 40 | 42.8 | 47.1 | 70.3 |
| Aviva | 43 | 31.6 | 60 | 55.5 |
| F&C | 52 | 30.7 | 32.5 | 44.4 |
| L&G | 53 | 16.1 | 30.2 | 32.6 |
| SWIP | 39 | 0 | 26.6 | 44.4 |
Source: FE Analytics
The study only took into account fund houses that run at least 30 funds, with at least 15 of those needing a 10-year track record. Only fund groups with a presence in the vast majority of IMA sectors were included, meaning that the likes of emerging market specialist First State were excluded.
Any fund that sits in the IMA Specialist or IMA Unclassified sectors was compared against its benchmark instead of the sector average.
Invesco Perpetual currently manages 44 funds, ranging across global fixed income, multi asset and equity markets.
The research highlighted that out of those 28 funds with a 10-year track record, 85.7 per cent of them are either first or second quartile in their individual sector over the past decade.
This dominance is replicated over the medium- and short-term, too. There are 37 Invesco Perpetual funds that have a five year track record and 81.1 per cent of those are first or second quartile over that time.
They again top the list over three years, with 86 per cent achieving first or second quartile status.
It is not too difficult to see why Invesco Perpetual’s collective performance has been so good over the long-term. Twelve of its funds have the coveted five crown-rating and the group has five FE Alpha Managers, including Neil Woodford, Mark Barnett and Martin Walker.
Many of its funds are run by experienced heads, such as the fixed income duo of Paul Causer and Paul Read, and Nick Mustoe, who is the company’s chief investment officer.
The group’s most renowned fund is the five crown-rated Invesco Perpetual High Income portfolio, which has been managed by Woodford since its launch way back in February 1988. It has now amassed £14bn worth of assets under management.
The fund has beaten the FTSE All Share by nearly 1,325 percentage points since its launch. If an investor had bought £1,000 worth of units in the fund at launch, that investment would now be worth in excess of £23,000.
Performance of fund vs index since Feb 1988
Source: FE Analytics
The fund is also the best performer in the IMA UK Equity Income sector over 10 years. It has an ongoing charges figure (OCF) of 1.69 per cent and requires a minimum investment of £500.
As stated earlier, Baillie Gifford has been the second-best performing fund house over the last decade. At least 75 per cent of its funds have been either second or first quartile in their sector over three, five and 10 years.
James Budden, director of marketing and distribution at the company, says that Baillie Gifford’s success stems from the group's general view of focusing on the micro – not the macro.
"We believe that successful investing is a long-term endeavour," he said.
"In order to outperform, we must take a different approach to other investors, to ignore ‘the market’ and most importantly resist the urge to react to the never-ending stream of mostly irrelevant ‘news’ that surrounds us in the modern world."
"We invest in companies, not markets, and our portfolios are shaped by where the best investment opportunities lie, rather than where the index dictates."
"We have no interest in ‘coverage’ only to rule out large swathes of dull companies: instead we value curiosity, insight and debate, and allow individuals to pursue their ideas wherever they may lead," he added.
Budden says the group's major strengths are in credit funds and regional portfolios. These include Baillie Gifford American, Baillie Gifford Greater China, Baillie Gifford Japanese and Baillie Gifford British Smaller Companies.
He says the plan is to begin marketing its funds more because its regional funds would fit well with IFAs and wealth managers.
One of the most consistent of its funds has been the five crown-rated Baillie Gifford European fund. The £75m portfolio is managed by the trio of Thomas Coutts, Paul Faulkner and Stephen Paice.
Although it isn’t talked about as much as the likes of Jupiter European or BlackRock European Dynamic, Baillie Gifford European has been a top-quartile performer in the IMA Europe ex UK sector over one, three, five and 10 years.
Over five years it is the fifth-best performing fund in the sector, with returns of 80.83 per cent. It has more than doubled the returns of the sector average over that time.
Performance of fund vs sector over 5yrs
Source: FE Analytics
The fund requires a minimum investment of £1,000 and has an OCF of 1.69 per cent.
M&G was the third best-performing fund group over the last decade, with 75.8 per cent of its funds with a 10-year track record registering at least top or second quartile performance over that time.
One of its best contributors has been FE Alpha Manager Max Godwin’s M&G Japan Smaller Companies fund. It is the best-performing portfolio in the IMA Japanese Smaller Companies sector over both five and 10 years.
Schroders and Fidelity came tied third over five years, while AXA IM was third over three years.
One of its funds that has been top-quartile over that time is FE Alpha Manager Nigel Thomas’s £4bn AXA Framlington UK Select Opportunities. It has returned 56.31 per cent over three years, beating the average fund in the IMA UK All Companies sector by 12 percentage points.
AXA Framlington UK Select Opportunities has an OCF of 1.57 per cent and requires a minimum investment of £1,000.
