Funds are judged according to their three-year track record, and ranked within their sector according to Alpha generation, volatility and the consistency with which they have beaten their benchmark. The top 10 per cent of funds are awarded five FE Crowns – the maximum.
Here, FE Trustnet looks at five recently launched funds that have achieved a five crown-rating at the first time of asking.
Henderson European Special Situations
The £488.9m Henderson European Special Situations fund is not only the largest but the only growth-focused portfolio in the list of newcomers.
It is managed by FE Alpha Manager Richard Pease, who also runs the five crown-rated Henderson European Growth fund.
Pease has managed Henderson European Special Situations since its launch in October 2009 and according to FE Analytics has returned 36.11 per cent since this time.
Performance of fund vs sector and index since October 2009
Source: FE Analytics
This beats both the sector and its benchmark – the FTSE World Europe index – which have returned 13.1 per cent and 18.91 per cent respectively.
The fund is also a top-quartile performer over one and three years.
Henderson European Special Sits has been considerably and consistently less volatile than its sector and benchmark, and is among the top-five biggest Alpha generators in its sector relative to its benchmark over three years.
The fund has 58 holdings and its largest market weighting is in the mid cap space, which makes up 50.9 per cent of its assets. In terms of regional weighting, Germany is currently its most popular choice.
Henderson European Special Sits requires a minimum investment of £1,000 and has a total expense ratio (TER) of 1.75 per cent.
Newton Managed Income
Newton Managed Income is another five crown-rated newcomer run by an FE Alpha Manager.
Tim Wilson has headed up the fund since its launch in April 2008 and has so far made a good impression in the IMA Flexible Investment 20-60% Shares sector.
Currently yielding 4.08 per cent, it has returned 28.28 per cent over three years, making it a top-quartile performer over the period. It has also managed this feat over the last 12 months.
Newton Managed Income is predominantly invested in other funds run by Newton Investment Management, but Wilson can hold portfolios from other investment houses as well. He currently has exposure to FTSE 100 and S&P 500 trackers.
It has a TER of 1.4 per cent and requires a minimum investment of £1,000.
CIS Sustainable Diversified
The £215.5m CIS Sustainable Diversified fund is also a constituent of the IMA Flexible Investment 20-60% Shares sector.
It has been slightly more successful than Newton Managed Income, beating its fellow five crown-rated fund over both one and three years, albeit with more volatility.
Over three years, it is the fourth-best performing fund in the sector, returning 28.44 per cent, just beating Wilson’s portfolio.
Performance of funds vs sector over 3-yrs
Source: FE Analytics
Linda Desforges has managed CIS Sustainable Diversified since its launch in the summer of 2009.
The fund’s largest asset allocation is in fixed income and cash, which together make up 55.7 per cent of the portfolio. This is a relatively new stance though; according to FE Analytics data, the fund had no exposure to bonds in February 2011.
In terms of its equity exposure, 18.2 per cent of the companies it holds are listed on the FTSE 100.
CIS Sustainable Diversified has a TER of 1.54 per cent.
Evenlode Income
Hugh Yarrow’s Evenlode Income is the only equity income-focused fund in the list of five crown-rated newcomers.
The niche £14m fund has returned 38.93 per cent over the last three years, beating the IMA UK Equity Income sector by nearly 10 percentage points and putting it in the top quartile.
It missed out on the market rally last year and has slipped into the third quartile over 12 months; however, the fund has a specific emphasis on income and downside protection.
It is currently yielding 3.66 per cent, and has been significantly less volatile than the average UK Equity Income fund.
It is top quartile over three years in terms of Alpha as well.
The fund obtains much of its yield from popular income-generative stocks such as Unilever, GlaxoSmithKline and Imperial Tobacco, which are all among Evenlode Income’s top-10 holdings.
The fund, which was launched in October 2009, requires a minimum investment of £1,000 and has a TER of 1.73 per cent.
FE Crown Ratings are rebalanced biannually and the next time this will happen will be in August 2013. The list of FE Alpha Managers is set to be updated in the first week of February this year.