There are 17 relatively young funds and investment trusts that have been awarded a top FE fundinfo Crown Rating for the first time – including the trust that made the highest return of 2020. 
The FE fundinfo Crown Ratings are a quantitative measure intended to help investors distinguish between funds that are strongly outperforming their benchmark and those that are not. The ratings look for superior performance when it comes to stock picking, consistency of outperformance against a credible benchmark and achievement of results at a relatively low risk.
In order to be eligible, funds have to have a track record of at least three years and in the latest rebalance – which was carried out this week – 120 funds and trusts were up for their first rating.
Of these, just 17 were awarded five crowns – the rating that goes to the top 10% of funds – and they can be seen below. We’ve also included their sectors, three-year total return and, where appropriate, their quartile ranking.
Source: FE fundinfo
The highest three-year return has come from Gary Robinson and Kirsty Gibson’s £1bn Baillie Gifford US Growth Trust, which gained 171.5% over this period. It also made the strongest return of the entire Association of Investment Companies universe in 2020, after it surged 133.5% when holdings such as Zoom, Amazon and Shopify emerged as ‘lockdown winners’.
Like all of the funds managed by Baillie Gifford, the trust buys ‘exceptional growth companies’, especially those that are disrupting their industries.
The investment philosophy is focused on the tendency for a small number of outliers to generate most of the market’s gains; Baillie Gifford thinks the increasingly connected and digital nature of the world means there is potential for greater performance from such outliers than there has been historically.
Performance of Baillie Gifford US Growth Trust vs sector and index over 3yrs
Source: FE Analytics
FE fundinfo Alpha Manager David Dudding’s £184m Threadneedle Global Focus fund made the second-highest three-year return of the young top-rated strategies, gaining 67.6%. Although this is far below Baillie Gifford US Growth Trust’s return, it puts it in the first decile of the IA Global sector.
This large-cap, growth-focused portfolio has some of the world’s best-known companies among its top holdings, including Microsoft, Google parent Alphabet and Samsung Electronics. Dudding concentrates on finding high-quality companies, in the belief that “the market underappreciates the value of competitive advantages”.
Several funds managed with regard to environmental, social and governance (ESG) considerations were also awarded an FE fundinfo Crown Rating of five at their first asking. These include Montanaro Better World, Jupiter Global Sustainable Equities and BNY Mellon Sustainable Real Return.
ESG investing has proven to be a successful strategy in recent years and one that many expect to continue to strengthen over the long term as more attention is put on issues such as climate change and social inequality.