TB Evenlode Income has emerged once again as the most consistent IA UK All Companies fund of the past decade, beating the FTSE All Share – the most common benchmark in its sector – in every one of the past 10 calendar years.
Tied in second place are Lindsell Train UK Equity, Liontrust Special Situations and Liontrust UK Growth, which beat the benchmark in nine of the past 10 years.
Most consistent IA UK All Companies funds
Source: FE Analytics
Of the 194 funds in the sector with a track record long enough to qualify for this study, a further nine beat the FTSE All Share in eight of the past 10 calendar years.
TB Evenlode Income’s managers Hugh Yarrow and Ben Peters aim to identify businesses with a large market share and/or competitive edges that can consistently generate high levels of recurring profits to be returned to shareholders as dividends. They look for profitable, asset-light, cash-generative companies with low debt and intangible assets that are difficult to replicate.
This fund is a member of the FE Investments Approved List, with the analysts that selected it saying: “The monitoring of a smaller universe of companies allows the managers to delve deeper into modelling and understanding companies, which makes for strong stock selection and fewer mistakes.
“Their processes and systems have become increasingly robust and efficient over the years, which sets Evenlode apart from other smaller management houses.
“With increasing commonality between larger cap income managers, we find that this fund provides a consistent process and unique growth profile that will complement any investor portfolio in search of income.”
TB Evenlode Income has made 172.31 per cent over the past decade, compared with 83.3 per cent from its sector and 73.26 per cent from its benchmark.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
The £3.7bn fund has an ongoing charges figure (OCF) of 0.87 per cent and is yielding 3 per cent.
Next up is LF Lindsell Train UK Equity, which has beaten the index in nine of the past 10 calendar years and the sector in all 10.
Manager Nick Train’s strategy involves investing in quality businesses and holding them for the long term.
The team at Square Mile Investment Consulting & Research pointed out there are few companies that actually meet the manager's criteria and, as a result, the final portfolio is concentrated across a limited number of holdings.
“The fund has successfully and consistently met its long-term performance objective and we have conviction in the manager and his ability to continue to meet this over the long term,” the team added.
Despite the fund’s record of consistency, Square Mile said it would be “best suited to investors that have little interest in the month-to-month and year-to-year performance of their investments, but instead seek attractive returns over very long time periods”.
In a recent note to investors, Train described the last 12 months as among the most challenging he can remember as a manager.
Although LF Lindsell Train UK Equity has not beaten the FTSE All Share as often as TB Evenlode Income over the past decade, it has delivered a higher total return over this time, at 217.24 per cent.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
The £6.5bn fund has ongoing charges of 0.65 per cent.
Both Liontrust Special Situations and Liontrust UK Growth are headed up by Anthony Cross and Julian Fosh, who run the funds in line with their Economic Advantage strategy.
The team at Square Mile said this is based on the belief that companies that have a durable competitive edge will generate above-average returns over the long term.
“For a company to have such an advantage, it needs to have one of the following three characteristics: intellectual property, a strong distribution network or a recurring revenue stream,” it added.
“These factors build the idea of a company having intangible assets, which may not be evident on its balance sheet but are vital components of its competitive advantage, as they are very difficult for others to replicate.”
Liontrust UK Growth fund has a higher weighting to the FTSE 100, at 60.1 per cent of its assets, than Liontrust Special Situations, at 39.9 per cent.
The £5.6bn Liontrust Special Situations fund has returned 198.41 per cent over the past 10 years. It has an OCF of 0.82 per cent.
Performance of funds vs sector and index over 10yrs
Source: FE Analytics
The £613m Liontrust UK Growth fund made 127.47 per cent and has an OCF of 0.88 per cent.