US asset manager Morgan Stanley has topped FundCalibre’s annual survey of asset managers with the most consistent track record of equity investment outperformance over five years for the third year running.
The fund platform’s latest edition of the Fund Management Equity Index found strong outperformance across Morgan Stanley’s global and US fund ranges compared with its peers.
According to FundCalibre, Morgan Stanley recorded a five-year outperformance average of 44.58 per cent, with 83 per cent of its six funds outperforming.
Performance of fund vs sector & benchmark over 5yrs
Source: FE Analytics
Its best performing fund was the $9.4bn, five FE fundinfo Crown-rated Morgan Stanley Global Opportunity fund, overseen by Alpha Manager Kristian Heugh, which was up by 170.07 per cent over the five years to end-2019. This compared favourably with a 76.23 per cent gain for the MSCI AC World benchmark and a 66.12 per cent gain for the IA Global peer group average.
Its sister fund Morgan Stanley US Growth also made the top-30 funds over five years with a total return of 137.46 per cent.
Other top performing asset managers were Baillie Gifford and Man GLG, who recorded average five-year performance figures of 31.71 per cent and 24.09 per cent respectively.
Source: FundCalibre
Baillie Gifford marked its sixth year among the top-10 best performing groups – alongside fifth-placed T. Rowe Price – signalling that its equity team has outperformed for over a decade, a level of consistency FundCalibre managing director Darius McDermott labelled “extremely impressive”.
Of the group’s 14 outperforming equity funds (from a total of 15), the Baillie Gifford American fund was the top performer with a return of 156.9 per cent over the past five years.
The latest survey found five asset managers – Wellington, Unicorn, Marlborough, Hermes and SVM – that have managed to produce outperformance across all of their qualifying equity funds during the past five years.
Unicorn Asset Management was also notable for its surge into the top-10 in the latest edition of Fund Management Equity Index climbing from 37th place to sixth in the leader board. McDermott noted that it had previously been a top-10 performer until a big fall in the rankings last year.
Other big climbers in the latest index were Legg Mason (up 26 places to 25th), Allianz (18 places to 27th), SCM (up 17 places to 18th) and GAM (up 16 places to 61st). 
FundCalibre’s McDermott (pictured) said that the sixth annual study of equity fund manager had thrown up some interesting results and shown consistent outperformance from active managers, with seven of last year’s top-10 reappearing this time around.
“Markets had a rollercoaster ride in 2019, with geopolitical uncertainty resulting in sharp gains and losses throughout the year,” said McDermott. “Despite seeing some life in value investing for the first time since 2016, the past 12 months were once again driven by growth and that is supported by some of the top performers and big movers in the list.
“We also have a real mix of larger and smaller businesses at the top end of the list, indicating success can be found across different business models.”
However, the FundCalibre managing director said there was a “huge difference” between the best and worst asset management group.
“The average outperformance of top group, Morgan Stanley's funds, was almost 74 per cent higher than that of the bottom group,” he added. “So good fund research is key to maximising the potential of your investment portfolio.”
At the foot of the table was New Capital, which made a five-year average loss of 29.16 per cent, with none of its four eligible funds outperforming the index.
French asset managers Carmignac and Candriam – each with assets well in excess of £4bn – were also notable at the bottom of the performance table making an average loss of 14.05 per cent and 11.72 per cent respectively.
The biggest fallers among the asset managers this year were Stewart Investors (down 63 places), Miton (down 43 places), JO Hambro (down 39 places), Schroders (down 26 places), and Invesco (down 25 places)
McDermott noted that Stewart Investors’ style, while generally less risky than other funds investing in emerging markets, tend to underperform in the types of strongly rising markets seen in 2019. They are more likely to outperform in falling markets, such as those seen towards the end of 2018, making its risk-adjusted performances stronger.
JO Hambro, Schroders and Invesco all suffered due to the value-style used by a number of their funds remaining out of favour, he added.
Source: FundCalibre
The top-performing fund over the five-year time frame was the £794.5m Legg Mason IF Japan Equity fund – managed by Hideo Shiozumi – which returned 195.5 per cent.
It was one of several specialist equity strategies to appear at the top of the table.
There were several technology funds at the top including Polar Capital Global Technology (up 195.17 per cent) and Fidelity Global Technology, which returned 189.98 per cent.
A number of Russian equity strategies also featured at the top including Pictet Russian Equities (up 187.58 per cent), Liontrust Russia (187.25 per cent), and HSBC GIF Russia Equity (186.58 per cent).