This means that most investors who buy a top-performing fund may have already missed its best days, even if it continues to do relatively well.
With this in mind, FE Trustnet looks at five funds with less than £100m in assets under management that have already delivered strong outperformance over the short- and medium- term, meaning their best days could well be ahead of them.
IMA Global – Guinness Global Money Managers
With just $800K under management, this tiny global fund packs a heavy punch.
| Name | Guinness Global Money Managers |
|---|---|
| Fund size | $800K |
| Min. investment | £5,000 |
| OCF | 1.99% |
| Yield | N/A |
| Manager | Tim Guinness and Will Riley |
| FE Crown Rating | N/A |
Source: FE Analytics
Over the last year, it is the best-performing portfolio in the IMA Global sector, gaining 34.33 per cent. The sector made just 15.72 per cent.
It also outperformed the MSCI World Index, which is up 19.77 per cent.
Performance of fund vs sector and index over 1yr
Source: FE Analytics
Since launch in December 2010, the fund has made 22.43 per cent, compared with 12.19 and 20.37 per cent from the sector and index, respectively.
The Dublin-domiciled fund is managed by chief investment officer Tim Guinness and Will Riley and invests in publicly listed equities of companies engaged in money management services.
Its top holding is FTSE 100 asset manager Aberdeen. Its top-10 also includes Liontrust Asset Management, Raymond James Financial and Rathbone Brothers.
The majority of the portfolio, 50.5 per cent, is invested in stocks in North America. It has 30 per cent in the UK and just 7 per cent in the rest of Europe.
IMA UK Equity Income – PFS Chelverton UK Equity Income
The £67.2m PFS Chelverton UK Equity Income fund is the third-best performing portfolio in the IMA UK Equity Income sector over one year, behind fellow boutique funds Unicorn UK Income and Majedie UK Income, which both have just over £100m in assets under management.
| Name | PFS Chelverton UK Equity Income |
|---|---|
| Fund size | £67.2m |
| Min. investment | £1,000 |
| OCF | 1.88% |
| Yield | 4.76% |
| Manager | David Horner and David Taylor |
| FE Crown Rating | Five Crowns |
Source: FE Analytics
The five crown-rated portfolio is top quartile over one, three and five years, nearly doubling the returns of the sector and FTSE All Share over each period.
It has made 61.84 per cent over the last half decade while the sector and index are up 35.03 and 33.21 per cent respectively.
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
The fund is yielding 4.75 per cent – one of the highest figures in the sector.
It invests in a mix of fully listed and AIM-listed UK equities – making it a good diversifier to large cap focused portfolios such as Neil Woodford’s Invesco Perpetual High Income fund and Artemis Income.
The fund is managed by David Horner and David Taylor,
IMA UK All Companies – Barclays UK Lower Cap
The £75.3m Barclays UK Lower Cap fund has undoubtedly benefited from the mid cap rally over the last 12 months because medium-sized businesses are its bread and butter.
The four crown-rated fund invests in UK companies outside the FTSE 100. Its top holdings include discount airline easyJet, bookmaker William Hill and British industrial equipment rental company Ashtead Group.
| Name | Barclays UK Lower Cap |
|---|---|
| Fund size | £75.3m |
| Min. investment | £500 |
| OCF | 1.80% |
| Yield | N/A |
| Manager | Barclays Wealth |
| FE Crown Rating | Four Crowns |
Source: FE Analytics
The fund is top quartile over one, three and five years, more than doubling the returns of the sector over each period. It is benchmarked against the FTSE All Share ex FTSE 100 ex IT index.
Performance of fund vs sector over 5yrs
| Name | 1 yr (%) | 3 yrs (%) | 5 yrs (%) |
|---|---|---|---|
| Barclays UK Lower Cap | 29.45 | 66.09 | 74.86 |
| IMA UK All Companies | 16.98 | 26.15 | 32.11 |
Source: FE Analytics
It is managed by Barclays Wealth.
IMA Global Emerging Markets – Charlemagne Magna Emerging Markets Dividend
While Aberdeen continues to be the undisputed leader in emerging markets, the tiny Charlemagne Magna Emerging Markets fund is putting up a good fight.
The €49.5m fund was only launched in June 2010, but over the last year it is the second-best performing fund in the IMA Global Emerging Markets sector.
| Name | Charlemagne Magna Emerging Markets Dividend |
|---|---|
| Fund size | €49.5M |
| Min. investment | £5,000 |
| OCF | 2.22% |
| Yield | 3.99% |
| Manager | Julian Mayo and Mark Bickford-Smith |
| FE Crown Rating | N/A |
Source: FE Analytics
Since launch, the fund has made 36.43 per cent while the sector has gained 11.55 per cent, according to FE Analytics.
Performance of fund vs sector since launch
Source: FE Analytics
It is yielding 3.99 per cent.
The fund’s highest sector weighting is to financials, with companies such as African Bank Investments, the Bank of China and Polish insurer Powszechny Zaklad Ubezpieczen (PZU) featuring in its top-10 holdings.
IMA Asia ex Japan – JOHCM Asia ex Japan Small & Mid Cap
The Dublin-domiciled JOHCM portfolio was only launched in September 2011, but is one of the best-performing portfolios in the IMA Asia ex Japan sector over one year.
| Name | JOHCM Asia ex Japan Small & Mid Cap |
|---|---|
| Fund size | £8.6m |
| Min. investment | £1,000 |
| OCF | 2.00% |
| Yield | N/A |
| Manager | Cho Yu Kooi |
| FE Crown Rating | N/A |
Over the period, the fund has picked up 25.09 per cent while the sector and MSCI Asia ex Japan Small Cap index have gained 12.08 and 15.4 per cent, respectively.
Performance of fund vs sector and index over 1yr
Source: FE Analytics
The fund’s small cap focus no doubt gives it a boost of growth, but investors should be wary that the illiquid nature of stocks further down the market cap spectrum, particularly in Asia, makes the portfolio more volatile. This means it is not for the faint of heart.
However, for investors who can stomach higher risk, the fund’s £8.6m size is an attractive entry point to grab the potential upside, especially as other high-growth smaller companies portfolios – such as Aberdeen Global Asian Smaller Companies – are already well over the $1bn mark.