Premier Miton US Smaller Companies and T. Rowe Price US Large Cap Growth Equity are two of the four North American funds that have made a storming start to life since launch in 2018.
Investors often choose to wait for funds to reach the three-year milestone before deciding to entrust the managers with their cash. But waiting for this long can prove costly if the funds get off to a strong start.
This is the case in North America, where four funds launched in 2018 have made top-quartile returns over three years to the end of 2021, despite little prior track record.
Premier Miton US Smaller Companies headlines the list. The £289m fund is the only one from the IA North American Smaller Companies sector in this study.
Launched on 14 March 2018, over the past three years the fund has made 99.5%, the fifth-highest figure among its peers and 31.9 percentage points ahead of the Russell 2000 benchmark index.
Total return of fund vs sector and benchmark over 3yrs
Source: FE Analytics
The fund is managed by Hugh Grieves and FE fundinfo Alpha Manager Nick Ford. It is made up of 70 to 100 fast-growing companies with a market value of between $100m (£73m) and $6bn, and has a bias towards sectors such as consumer discretionary (27.3% of the fund) and technology (23.4%).
Its performance over three years was turbocharged by an exceptional 2020, when it topped its sector as these industries rocketed on the back of the pandemic. Tech firms prospered as people worked from home, relying more on their home software.
The fund softened last year, however, losing 3.4%, the third-worst return in the sector, and has dropped a further 9.3% in 2022 so far.
T. Rowe Price US Large Cap Growth Equity was the best active fund from the IA North America sector. Over the three years to the end of 2021, the £134.6m portfolio made 99.8%, more than 18 percentage points above its average peer.
Total return of fund vs sector and benchmark over 3yrs
Source: FE Analytics
The fund, which is the OEIC equivalent of the longer-running T. Rowe Price US Large Cap Growth Equity Fund Sicav version, buys rapidly growing companies with market capitalisations above $5bn. It has a number of the world’s largest technology companies – including Microsoft, Alphabet, Amazon, Meta and Apple – in its top-10 holdings.
This strategy worked well in 2020 but it struggled from a relative point of view in 2021. Unlike the small-cap fund above, however, the T. Rowe Price fund made 19.8% last year – a bottom-quartile performance but still in positive territory.
New Capital US Future Leaders fund also followed the same path as the other active funds on the list, with an impressive 2020 followed by a less-than-stellar year in 2021.
Total return of fund vs sector and benchmark over 3yrs
Source: FE Analytics
Like the others, it too has a high weighting to technology stocks (33%) but invests in the mid-cap part of the market, showing that this strategy has worked across the market-cap spectrum.
The only passive fund on the list was the $4.7bn Xtrackers ESG MSCI USA UCITS ETF. The fund has capitalised on the boom in sustainable investing as savers have looked to do good with their money as well as make returns.
It tracks the MSCI USA Low Carbon SRI Leaders Index, which invests in large- and mid-cap companies with low carbon exposure that score well on environmental, social and governance metrics. Microsoft makes up more than 12% of the index, while Alphabet takes up more than 9%.
| Fund | Sector | Fund size | Manager name(s) | OCF | Launch date |
| New Capital US Future Leaders | IA North America | £193m | Mike Clulow | 2.98% | 08/08/2018 |
| Premier Miton US Smaller Companies | IA North American Smaller Companies | £260m | Nick Ford, Hugh Grieves | 0.86% | 14/03/2018 |
| T. Rowe Price US Large Cap Growth Equity | IA North America | £135m | Taymour Tamaddon | 0.82% | 29/05/2018 |
| Xtrackers ESG MSCI USA UCITS ETF | IA North America | £3,499m | N/A | 0.15% | 08/05/2018 |