As a frustrated reader recently pointed out, however, many of the hidden gems that we flag up are more than hidden – they are not available on any platforms, making it next to impossible to add them to their portfolios.
Investors can always invest directly, but this often means having to wait for hours on the phone to speak to the lone salesman at a boutique firm. Even when you get through, often you are faced with a hefty initial charge, or an eye-watering minimum investment.
Bestinvest’s Jason Hollands says that many of the business-to-business platforms have traditionally ignored top-performing boutique funds because there has not been enough adviser demand for them.
This, he says, results in a cycle of disappointment for the smaller outfits.
"There’s no doubt that a lot of the big business-to-business platforms out there have turned away some very good boutique funds, insisting that they would only consider them if they had more adviser-backing," explained Hollands (pictured).
"The problem with this is that the same fund houses go to the advisers who say they can’t give them backing because they’re not on the platform. It’s a vicious cycle."Hollands says that the Bestinvest platform prioritises track record and performance ahead of assets under management (AUM) when any decision is made, but says that demand from investors and advisers is important.
For other platforms, he says it is even more important.
"We add funds after we rate them, and we rate any fund that comes on our radar," he said. "A lot of the stuff we have you don’t see on the others."
Adrian Lowcock says that investor demand is the all-important factor when it comes to Hargreaves Lansdown adding a fund.
"If there’s demand for it, we wouldn’t hesitate to put it in," he said. "It’s as simple as that really, as it’s very straightforward for us to get a fund on to the platform."
"If you call the help desk and say what the fund is, then it’ll be noted. I’m not saying it will automatically be on the platform because of a phone call, but if there is adequate demand, then we’d look into it."
He points to Pictet Biotech as an example of a fund that has been added to the platform recently.
With this in mind, we highlight three top-rated boutique funds that have a poor presence on the platforms. If you like what you see, then you will have to start making some noise about it to your platform of choice.
McInroy & Wood Emerging Markets
This fund is a top-decile performer in the IMA Global Emerging Markets sector over one, three and five years, as well as since its launch in 2007. Only one other fund – Aberdeen Global Emerging Markets Smaller Companies – has achieved the feat.
Given that so many funds in the sector have either soft-closed or are discouraging inflows at the moment, the fund could be regarded as a good alternative.
Performance of fund vs sector and index over 5yrs
| Name | 1yr (%) | 3yr (%) | 5yr (%) |
|---|---|---|---|
| McInroy & Wood Emerging Markets | 24.95 | 39.98 | 77.15 |
| MSCI EM | 12.98 | 10.47 | 21.1 |
| IMA Global Emerging Markets | 14.13 | 9.57 | 16.05 |
Source: FE Analytics
In spite of its impressive record, the multi cap fund has only £45m in AUM. Why? You guessed it – it is not on any of the major platforms.
Commenting on a previous FE Trustnet article, Will Lindsay, a spokesperson for the group, pointed out that the firm is not sales driven, and only lists its funds on platforms that have adequate demand from advisers.
McInroy & Wood Emerging Markets and the other three funds managed by the firm are currently available via Ascentric, KNZ, Nucleus and Transact.
Hollands says he rates the fund, but has not included it on the Bestinvest platform because it only trades weekly, rather than daily.
The five crown-rated fund, which is headed up by the trio of Francis Seymour, David Shaw Stewart and Guido Bicocchi, has an ongoing charges figure (OCF) of 1.69 per cent.
CF Olim UK Equity
Another five crown-rated fund, CF OLIM UK Equity is a top-quartile performer in the highly competitive UK Equity Income sector over three, five and 10 years.
Angela Lascelles’ £10.5m vehicle has returned 178.12 per cent over a 10-year period, compared with 133.61 per cent from the All Share and 126.34 per cent from the sector average.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
The fund, which is currently yielding a touch under 4 per cent, has a multi cap focus, including FTSE 100 giants Vodafone and BP, as well as FTSE 250 companies Spectris and Halma.
CF Olim UK Equity is available on some platforms, but its small size means that it is absent from many of the major ones. FE data shows that it is available on Transact and the James Hay Wrap.
It has an OCF of 1.5 per cent.
IM Matterley Regular High Income
This £50.8m fund is one of the few with a maximum FE Crown rating that sits in the IMA Mixed Investment 0%-35% Shares sector.
As its name suggests, the fund focuses predominantly on generating income, which it pays out by way of a dividend four times a year. The yield currently stands at 4.03 per cent.
Managers Chris Evans and Chris Harris also target a degree of capital growth. This, with dividends reinvested, has resulted in strong total returns since its launch in 2006, relative to its sector, cash and inflation. The fund does not use a specified index.
Performance of fund since launch vs sector and indices
Source: FE Analytics
The managers invest in a mixture of corporate and government bonds, equities, preference shares, convertibles and cash. Equities currently have an 18 per cent weighting.
It is available with an OCF of 1.11 per cent, but is not included on many of the major platforms. Novia and Transact do offer it, however.
