CF Lindsell Train UK Equity, Evenlode Income and Liontrust Special Situations are some of the IA UK All Companies funds sitting at the very top of their peer group across a number of closely watched metrics, the latest study by FE Trustnet reveals. 
Last year, we ran a series of articles looking at funds’ decile rankings when it comes to cumulative five-year returns and those for the three most recent individual calendar years. Added to this, we examined their rankings for annualised volatility, maximum drawdown, alpha generation, Sharpe ratio, downside capture and upside capture.
The series proved to be very popular and following several requests we’ve re-ran the numbers to include performance up to the end of 2016. We’ve started with the IA UK All Companies sector and will be examining the other major peer groups over the coming weeks.
There have been some changes in the ranking of this annual study. Last year it was headed up by CF Lindsell Train UK Equity but for the current iteration, which spans 1 January 2012 to 31 December 2016, a new fund is topping the table.
Over the following pages, we take a closer look at the five IA UK All Companies fund leading the sector on the average decile ranking for the 10 metrics as well as revealing the top 25 in a table on the final page.
Royal London Sustainable Leaders Trust
Performance of fund vs sector and index between 1 Jan 2012 and 31 Dec 2016
Source: FE Analytics
In fifth place, we have the £518.3m Royal London Sustainable Leaders Trust, which is headed up by FE Alpha Manager Mike Fox and has an average decile ranking of 2.6 for the 10 metrics we examined. Last year, the fund was in third place with a 1.8 average. Fox’s investment style is heavily influenced by the ethical mandate of the fund: its core themes are the environment, human welfare and sustainability, which means it tends to have a bias towards healthcare, infrastructure and climate-change related companies. Top holdings include Rentokil Initial, Amazon.com and Unilever. Over the past five years, Royal London Sustainable Leaders trust is in the sector’s top decile for maximum drawdown and Sharpe ratio and in the second for five-year returns, alpha generation and downside capture.
Evenlode Income
Performance of fund vs sector and index between 1 Jan 2012 and 31 Dec 2016
Source: FE Analytics
Last year, this £1.2bn fund was in the IA UK Equity Income sector but has since moved after missing the peer group’s yield target. Evenlode Income topped the IA UK Equity Income sector in last year’s research but is now in fourth place in the IA UK All Companies sector after posting an average decile ranking of 2.4. Run by FE Alpha Manager Hugh Yarrow with Ben Peters as deputy, the five FE Crown-rated fund has turned in top decile numbers for annualised volatility and Sharpe ratio while being in the second decile for alpha generation, maximum drawdown and downside capture. Yarrow’s process focuses on companies that can deliver sustainable growth with limited need for capital reinvestment, thereby leaving them with ample cash to return to shareholders in the form of dividends. This leads to a relative defensive portfolio but it can lag strongly rising markets – as shown by its sixth decile ranking for upside capture. Unilever, Diageo and GlaxoSmithKline are the currently the portfolio’s biggest holdings.
Liontrust Special Situations
Performance of fund vs sector and index between 1 Jan 2012 and 31 Dec 2016
Source: FE Analytics
With an average decile ranking of 2.3, the five FE Crown-rated Liontrust Special Situations fund comes in third place on our shortlist. It is in the top decile for annualised volatility, maximum drawdown, Sharpe ratio and downside capture. The £2.5bn fund is run by Anthony Cross and Julian Fosh, who are both FE Alpha Managers, and is essentially a ‘best ideas’ fund of Fosh’s large-cap mandate and Cross’ small- and mid-cap portfolio. It is managed using the Liontrust Economic Advantage process, which seeks out companies with intangible assets such as desirable intellectual property, strong distribution channels and significant recurring business. Its three biggest holdings are Relx Group, GlaxoSmithKline and Unilever. Last year, it was in 11th place of this study after achieving an average decile ranking of 2.6.
CF Lindsell Train UK Equity
Performance of fund vs sector and index between 1 Jan 2012 and 31 Dec 2016
Source: FE Analytics
In second place is FE Alpha Manager Nick Train’s £3.4bn CF Lindsell Train UK Equity fund, which boasts a 2.3 average decile ranking. As mentioned, this five FE Crown-rated fund topped last year’s study with a 1.6 average decile ranking. CF Lindsell Train UK Equity sits in the sector’s top decile for five-year returns, alpha generation, Sharpe ratio and maximum drawdown while being second quartile for upside and downside capture. It is, however, in the seventh decile when it comes to annualised volatility. Train has a strong reputation as a long-term investor: he builds his portfolio around just 25 or so names, with a bias towards durable, cash-generative business franchises that the market frequently undervalues and the manager rarely sells. Its biggest holding is Unilever, followed by Diageo, Relx Group, London Stock Exchange and Schroders.
CFP SDL UK Buffettology
Performance of fund vs sector and index between 1 Jan 2012 and 31 Dec 2016
Source: FE Analytics
Topping this year’s list with an average decile ranking of 2 is CFP SDL UK Buffettology, which is overseen by FE Alpha Manager Keith Ashworth-Lord. The £111.1m fund, which holds five FE Crowns, is in the top decile for five-year returns, alpha generation, maximum drawdown, Sharpe ratio and downside capture; its annualised volatility is in the second decile and it has dropped no lower than fifth decile for the 10 metrics examined. As its name suggests, the fund mirrors the investment style of Warren Buffett, holding the exclusive rights to the Buffett name and a 10-year licence period to copy the investor’s distinct long-term, value-orientated approach within a UK equity fund. In keeping with this, Ashworth-Lord favours enduring franchises or well established businesses that are household names or have a unique product, all coupled with good growth prospects. CFP SDL UK Buffettology’s top five holdings at the moment are Scapa Group, Trifast, RWS Holdings, Bioventix and Mattioli Woods.
Source: FE Analytics