Global equity funds that use the quality-growth style of investing have generated the most consistent top-decile numbers for returns, volatility and several other important metrics over recent years, Trustnet has found. 
The years since the global financial crisis has seen the significant outperformance of the quality and growth styles, while value has struggled to keep up.
FE Analytics shows the MSCI World Quality index made a 106.73 per cent total return in the five years to the end of 2019 while its growth counterpart was up 99.11 per cent. MSCI World Value, on the other hand, made 60.06 per cent.
When Trustnet carried out its annual risk/reward study on the IA Global sector – the methodology of which can be seen to the side – this trend was very much in play in the funds space as well.
Within this highly competitive sector, the fund that has achieved the highest average decile rank in this research is Stonehage Fleming Global Best Ideas Equity. It scored 2 thanks to top-decile numbers for its five-year returns of 101.39 per cent, alpha, Sharpe ratio, downside capture and upside capture.
Performance of fund vs sector over 5yrs to end of 2019
Source: FE Analytics
Overseen by FE fundinfo Alpha Manager Gerrit Smit, the $1.2bn fund looks for companies that have sustainable organic growth, quality management teams, efficiency (in terms of factors such as return on invested capital and balance sheet strength) and free cash flow generation.
In a recent note, Smit highlighted some of the main themes that are currently playing out in the portfolio and these include direct to consumer (through holdings like Nike, Amazon and Walt Disney), technology (Microsoft, Amazon, PayPal, Visa, Alphabet, Accenture, Adobe and Tencent), healthcare (Zoetis, Intuitive Surgical, Stryker and Becton Dickinson) and the emerging consumer (Estée Lauder, Nestlé and McDonald’s).
Source: FE Analytics
However, many of the funds at the top of the sector in this research have a similar style and invest in so-called quality-growth stocks – which have led the market rally for most of the post-crisis period.
In second and third places with an average decile rank of 2.1 are Morgan Stanley Global Brands and Investec Global Franchise. The first fund made 109.43 per cent over the five years to the end of 2019 while the second was up 103.16 per cent.
Both have a similar approach in that they focus on global brands or franchises, seeking out high-quality names that generate high levels of return on invested capital and strong free cash flow. Their top-10s have some crossover, including Microsoft, Phillip Morris and Visa.
The next two funds on the list are some well-known quality-growth strategies: Lindsell Train Global Equity and Fundsmith Equity.
Lindsell Train Global Equity made the highest returns of the IA Global sector over the five years under consideration, gaining 147.44 per cent. Only Morgan Stanley Global Opportunity made more with a 170.07 per cent total return.
Fundsmith Equity, meanwhile, is one of the largest funds in the industry today: its portfolio is some £17.8bn in size. Its strong returns since launch have won it a lot of fans.
Indeed, a quick scan down the list shows even more names that suggest a focus on quality-growth with Wellington Global Quality Growth, Morgan Stanley Global Quality, Sanlam Global High Quality and Trojan Global Equity all fitting into this bucket.
Source: FE Analytics
All of the above means that the bottom of the table – or the IA Global funds that are most often in the sector’s bottom deciles for the 10 metrics – includes value funds.
The fund with the highest average decile rank is SKAGEN KonTiki, with a score of 9.3 and a five-year total return of just 29.5 per cent. While it resides in the IA Global sector, the portfolio focuses on emerging markets – which have lagged the developed world for much of the recent past and explains the fund’s underperformance.
Other funds on the above list and just outside of it have a more pronounced bias towards the value style include Sanlam Global Value, M&G Global Strategic Value, Templeton Growth and ES R&M Global Recovery.