Sebastian Lyon headlines a group of seven fund managers that have entered the FE fundinfo Alpha Manager Hall of Fame in 2022, taking the list to 51 managers overall.
To gain an Alpha Manager rating, fund managers are ranked according to their track records since 2000, with extra weighting applied to those with longer track records.
The rating is based on three components: risk-adjusted alpha; consistency of outperformance versus their benchmark; and outperformance in both up and down markets.
Entry to the Hall of Fame requires managers to hold this rating for seven consecutive years, no mean feat over the past three quarters of a decade.
It is a much more exclusive group. For example, while Baillie Gifford has the largest amount of Alpha Managers, when it comes to the Hall of Fame, they only have two on the list. Jupiter meanwhile has six while Fidelity has four.
Charles Younes, research manager at FE Investments, said: “Given that two of the past seven years have been marked by extreme volatility in the wake of the Covid pandemic and subsequent rises in inflation and interest rates, the 51 managers on the Hall of Fame have performed outstandingly well to navigate these challenges and market rotations.
“Navigating these changing markets and wider economic events has been a constant feature of the alpha managers and for the most experienced managers they have been able to do so successfully for years, if not decades.”
Of the new entrants, first up is Sebastian Lyon, best known for his Troy Trojan fund and Personal Assets investment trust.
Both are managed with wealth preservation at the heart of what they do, which may explain the poor performance over the past decade. Indeed, both are in the bottom quartile of their respective sectors over 10 years as markets have largely boomed during this time with few down periods.
However, the portfolios have come into their own in recent years, making top-quartile returns over the past 12 months as they have weathered the worst of the market falls, particularly year-to-date.
Total return of the fund and trust vs their sectors over 1yr
.png)
Source: FE Analytics
Sticking with the protecting capital theme, Church House Investment’s Jeremy Wharton also made an entry into the Hall of Fame. His SVS Church House Tenax Absolute Return Strategies fund is a popular choice among fund pickers and has held up well when markets have fallen.
The boutique fund house does not use short selling as part of its process, focusing on diversification and risk management to achieve positive returns over rolling 12-month periods.
Turning to the more adventurous part of the market, Morgan Stanley fund manager, William Lock, also entered the Hall of Fame after his suite of funds, which included Morgan Stanley Global Brands Equity Income and Global Sustain, held up well in the recent volatility.
While some of the firm’s other funds, such as the well-known Morgan Stanley US Growth fund, have struggled this year (down as much as 30% earlier this year), his portfolios have generally avoided the worst of the market falls in January and February, while over the long term have also held up well.
Tom Holl from BlackRock also made the list. The manager of the BlackRock Gold & General fund has had a barnstorming past couple of years as commodities have roared back into fashion as inflation has ramped up.
Over the past three years the fund is up 54.3%, bouncing up during the Covid pandemic and again more recently as investors have moved to combat higher prices.
Total return of the fund over 3yrs
.png)
Source: FE Analytics
Elsewhere, William Pattisson from Ardevora Asset Management made the list on the back of strong long-term performance from his Ardevora UK Equity and Global Equity funds, although both have struggled in recent years. The manager has benefited from the higher weighting given to longer-term returns, as the funds are both bottom of their sectors over five years.
Similarly, despite the recent drop in the Chinese equity market thanks to harsher regulations from the government, Matthews Asia fund manager Yu Zhang, who heads up the China Dividend and Asia Dividend funds, also made the list.
Clive Hexton from Rathbone, who manages an array of smaller funds, rounded out the seven.