Close to 30 funds in the competitive IA Global sector managed to deliver top-quartile returns in both 2018 and 2019, despite the two years presenting investors with very different conditions to navigate.
Last year ended up being one of the strongest for investors in the past decade, with markets overcoming worries such as the US-China trade war, Brexit and slowing economic growth. The MSCI World index ended 2019 with a total return of 22.74 per cent (in sterling terms).
This was in stark contrast to the year before, when many of the same issues dragged on investor sentiment and the global equities index made a loss of 3.04 per cent.
Against this backdrop, Trustnet looked across the IA Global sector – which has attracted a swell of inflows in recent years – to see which funds turned in top-quartile returns over both 2018 and 2019.
Of the 76 funds that were in the peer group’s top quartile in 2018, 27 retained this position last year. They can be seen below, ranked in order of their cumulative return over both years.
Source: FE Analytics
The fund at the very top of the list – LF Blue Whale Growth – only launched in September 2017. It is run by Stephen Yiu of Blue Whale Capital, which was started by Hargreaves Lansdown co-founder Peter Hargreaves.
Yiu builds a concentrated portfolio of between 25 and 35 companies, with top holdings at present including Mastercard, Facebook and Boston Scientific. Close to half of the portfolio is in tech stocks while 70 per cent is in US names, both of which are areas of the market that have performed strongly in the recent past.
Between launch on 11 September 2017 and the end of 2019, LF Blue Whale Growth has made a total return of 42.61 per cent – ranking it second in the IA Global sector over this time frame. Only Baillie Gifford Positive Change made more, with a 43.14 per cent gain.
Performance of LF Blue Whale Growth vs sector and index over 2018 and 2019
Source: FE Analytics
Hargreaves, chairman of Blue Whale Capital, said: “At the outset we cautiously promoted our fund and our lofty objectives of delivering consistent outperformance alongside a globally diversified, concentrated portfolio of disruptive companies, emphasising how we would strive to be the number one fund.
“This certainly raised a few eyebrows; however, I am incredibly proud of my team topping the performance table and, in doing so, beating some of the most famous names in fund management.
“However, our work is not done as we wish to build on this level of performance for our investors. We see many reasons to be positive in 2020, but we keep a cautious eye on the global economy as we navigate possible pitfalls and take advantage of investment opportunities when they arise.”
In second place in terms of 2018 and 2019’s cumulative returns is Seilern World Growth. It is headed up by Michael Faherty and focuses on quality stocks with “proven track records, sound financials and predictability of future earnings growth”.
This is another portfolio with a bias to the US and tech stocks, counting the likes of Google-parent Alphabet, Mastercard and Nike among its largest holdings.
Seilern World Growth launched in December 2007 and has a strong long-term track record: it is currently in the IA Global sector’s top decile over one, three, five and 10 years.
In third place is a fund that takes a more specialised approach than the two mentioned above. As its name suggests, William Argent’s VT Gravis Clean Energy Income fund offers exposure to companies operating in the provision, storage, supply and consumption of clean energy.
Performance of Fundsmith Equity vs sector and index over 2018 and 2019
Source: FE Analytics
Some of the IA Global sector’s best-known names can also be found on the list of funds that were able to outperform in the very different years of 2018 and 2019.
With assets under management of £19.2bn, Fundsmith Equity is one of the largest funds in the industry today and has generated handsome returns since its launch in 2010.
Manager Terry Smith has a quality-growth bias with a big chunk of the portfolio invested in areas such as the US, consumer staples and technology – all of which have risen strongly for much of the past 10 years.
“However, Smith’s superior stock selection can’t be denied as this tends to be what keeps the fund supported during times when his style is more likely to be out of favour,” analysts with FE Investments said. “In relative terms, the fund remains impressive, only being challenged by a few other funds with similar investment strategies.”
Other funds that topped the IA Global sector in 2018 and 2019 while running more than £1bn include Morgan Stanley Global Opportunity, Wellington Global Quality Growth, Pictet Security, Baillie Gifford Long Term Global Growth Investment, Robeco Global Consumer Trends Equities and Rathbone Global Opportunities.