Alpha Manager Ratings changes ring out

Representing the top 10 per cent of the industry, the ratings are based on measuring three key factors: risk adjusted alpha, consistent outperformance of a benchmark, and out/underperformance in both up and down markets.

Among the higher ranked new entrants are Cazenove's Alex Smitten, Legal & General’s Richard Hodges, Hugh Hendry of the CF Eclectica Absolute Macro fund, and Neptune’s Chris Taylor.

It is clear from a sector breakdown of the new entrants, that fixed interest has played an important role among managers new to the list. Many have overseen on a sole or co-managed basis portfolios in sectors such as Global Bonds, UK Sterling Corporate Bond, Sterling Strategic Bond and UK Gilt.

The staples of Balanced Managed and Cautious Managed are also well represented. Some of the new names will have proved their mettle by outperforming peers in these sectors that include or are dedicated to making returns from fixed interest assets, while others will have reached the minimum period for inclusion, according to the rating methodology; these include Richard Hodges, Allianz RCM’s Seung Minn, Henderson New Star’s Philip Payne, and M&G's Greg Aldridge.

However, equity assets have not completely fallen by the wayside. Invesco Perpetual's Bob Yerbury (Global Growth), Neptune’s Felix Wintle (North America), and Ruffer’s Mary McBain (Specialist) illustrate the ability of equity fund managers to perform on behalf of investors.

Absolute Return is another interesting sector, where BlackRock's Mark Lyttleton and Threadneedle's Quentin Fitzsimmons have been included.

Beyond sectors, the ratings also provide guidance to which strategies being followed by managers perform best on behalf of investors.

For example, Jan Luthman of CF Walker Crips, notes that it helps highlight the thematic approach he and colleague – and fellow Trustnet Alpha Manager Stephen Bailey  – take to their co-managed portfolios.

In this case, the approach sees the managers identify macro themes, such as globalisation, and view risk as multifaceted – political, social, economic - in order to identify winners and losers among the holdings under consideration for inclusion in the portfolios.

The ratings should not just be seen as an exercise in quantitative analysis, says Luthman, but also as a positive step for end clients, who gain access to independent research that can assist in spotting good performance.

"A certain credibility attaches to the fund and/or manager," says Luthman.

The updated Trustnet Alpha Manager league table is available here.