We also highlighted several low-cost tracker funds that are trouncing their active rivals in the sector.
This certainly makes for poor reading if you’re a supporter of active managers, but there are big exceptions. Global managers have a huge range of opportunities to choose from and some have used them to good effect, consistently adding value to their benchmarks.
With that in mind, we look at five top-performing funds in the IMA Global and Global Equity Income sectors that have justified their higher fees.
M&G Global Dividend
FE Alpha Manager Stuart Rhodes has headed up this popular fund since July 2008.The fund is the largest in the IMA Global sector and has grown from £1bn three years ago to £9bn at time of writing.
According to FE Analytics, M&G Global Dividend has been a top decile performer since its launch with returns of 101.54 per cent. The fund’s MSCI AC World benchmark has gained 71.1 per cent over the same period.
Performance of fund, sector and index since July 2008
Source: FE Analytics
That outperformance has been consistent, with the fund beating the index in each calendar year since its launch.
It has had a more difficult 2014, though investors who have backed Rhodes since launch are unlikely to mind too much given how strongly it has performed throughout the cycle.
Rhodes prioritises dividend growth above all else, believing finding companies with sustainable policies is the key to generating a good total return.
The fund sits in IMA Global rather than the IMA Global Equity Income sector for this reason, as the manager doesn’t want to be constrained by a yield target.
The fund is highly-rated by FE Research and is a member of the FE Select 100. Amandine Thierree, analyst at FE, is a fan of the fund because of its stated goal to grow income rather hit a yield target.
“Rhodes only invests in 50 stocks and if one gets in, another is kicked out. He prefers to buy companies with a low yield, as this suggests they are under less pressure and have room to increase their income pay out,” Thierree said.
The manager has a bias towards quality mega-caps within his portfolio and counts the likes of Microsoft, British American Tobacco, Johnson & Johnson and Novartis as top 10 holdings.
M&G Global Dividend has an ongoing charge [OCF] of 0.91 per cent.
Artemis Global Income
This £1bn fund, which sits in the IMA Global Equity Income sector, is managed by Jacob de Tusch-Lec.
The five crown-rated fund is number one in its IMA Global Income sector since launch. It has returned 83.85 per cent since July 2010, compared to the sector’s 54.68 per cent. Its benchmark – the MCSI AC World index – is up 52.54 per cent over the same period.
Performance of fund, sector and index since July 2010
Source: FE Analytics
Hawksmoor’s Richard Scott recently told FE Trustnet the fund was more likely to outperform Rhodes’ M&G Global Dividend fund in the coming years.
The fund differentiates itself versus many of its peers by steering away from the more traditional income stalwarts, and combining stock selection with a consideration of the macro backdrop, according to Square Mile Research.
“The manager ultimately looks to provide a blend of companies with different characteristics whose fortunes do not rise and fall together, as may be the case with a portfolio made up of purely high yielding blue-chip names,” Square Mile said.
De Tusch-Lec told FE Trustnet that the fund is designed for UK investors looking to diversify away from the UK dividend paying market and because of that, he keeps a very low weighting to FTSE-listed companies.
In a sector where the majority of funds have their highest regional weighting to the US, De Tusch-Lec has 43.4 per cent of the portfolio in Europe.
He upped his weighting to the eurozone in 2011 when valuations plummeted.
The fund has an OCF of 0.85 per cent.
Artemis Global Growth
Peter Saacke has headed up this £208m fund since January 2004.
It has beaten its benchmark – the MSCI AC World index – in seven out of the last 10 calendar years. Since Saacke took over the fund it has returned 180.31 per cent compared a sector average of 111.51 per cent and a gain in its index of 128.72 per cent.
Performance of fund, sector and index since Jan 2004
Source: FE Analytics
The fund has also been a top quartile performer in the IMA Global sector over one, three, five and 10 years.
Despite holding more than 150 stocks, the manager has been able to add considerable value in recent years.
He tends to take quite punchy sector bets, with 15.2 per cent in basic materials at time of writing.
Similarly to De Tusch-Lec , Saacke has also an overweight position in Europe.
It represents 44 per cent of the portfolio, making it his largest regional weighting.
North America is the next largest followed by Asia Pacific which make up 38.3 and 26.2 per cent of the portfolio, respectively.
The fund has an OCF of 0.9 per cent.
JOHCM Global Select
Many global funds have been accused of being “closet-trackers”, but this £1.5bn fund certainly doesn’t fall under that bracket.
JOHCM Global Select has a very concentrated portfolio of just 34 holdings, meaning that it has a very low correlation to its benchmark.
Since it launched in September 2008, the fund has returned 63.8 per cent while the IMA Global sector and MSCI AC World index have returned 37.67 per cent 44.74 per cent, respectively.
Performance of fund, sector and index since Sep 2008
Source: FE Analytics
It is also a top quartile performer over one, three and five years.
The co-managers – Christopher Lees and Nudgen Richyal – have a big overweight to technology, which cost it when markets sold off in March. However, the fund’s performance has improved and it is currently up 7.23 per cent since the start of the year, ahead of the sector average and its benchmark.
JOHCM Global Select has an OCF of 0.8 per cent.
Rathbone Global Opportunities
The £430m Rathbones Global Opportunities fund has been managed by FE Alpha Manager James Thomson since November 2003.
Over the past 10 years it has returned 220.02 per cent, almost doubling the returns of the IMA Global sector average. The FTSE World index has gained 147.75 per cent over the period.
Performance of fund, sector and index since Jan 2004
Source: FE Analytics
It is another high conviction portfolio of 51 stocks, and has beaten its benchmark in eight out of the past 10 full calendar years.
“Thomson’s approach was too aggressive before 2008 and the fund performed poorly in that year. The manager appears to have learned from his mistakes, however, and is now quick to identify and drop a position to avoid further losses when it isn’t working,” Thierree said.
Favouring developed markets, the manager holds no emerging market stocks and has even recently sold out off developed market stocks with exposure to emerging economies, such as luxury good giant LVMH.
Thomson has been steadily increasing his exposure to US equities over the past 18 months from 32 per cent to more than 61 per cent.
He has 14.22 per cent in Europe and 12.97 per cent in the UK and almost 8 per cent in cash.
He recently told FE Trustnet he predicted developed markets would outperform emerging markets for the next decade.
Rathbone Global Opportunities has an OCF of 0.8 per cent.
