Relatively young funds such Man GLG Absolute Value, Brown Advisory US Sustainable Growth and CFP SDL Free Spirit have been given five FE fundinfo Crowns in their first-ever rating under this methodology. 
The FE fundinfo Crown Ratings are rebalanced twice a year – in January and in July – and have just been updated. They are based on funds’ performance over the previous three years and focus on three key metrics: alpha, volatility and consistent performance.
The top 10 per cent of the industry is awarded five crowns and amongst this top decile of funds are 14 young strategies that have only just built up their three-year track record.
The largest fund on this list is the £951.8m Brown Advisory US Sustainable Growth fund, which is managed by David Powell and Karina Funk. Over the three years to the end of June 2020, it made a 93.29 per cent total return – ranking it in sixth place out of the 140 funds in the IA North America sector.
The fund was launched in the UK in 2017 but the team have been managing the original US strategy since 2009.
Performance of fund vs sector and index over 3yrs
Source: FE Analytics, as at 30 Jun 2020
Powell and Funk build their portfolio around US companies that have outstanding business models and a sustainability focus that helps them increase revenue growth and enhance franchise value.
Brown Advisory makes use of negative screens to make sure the fund is only invested in companies that are being managed responsibly, avoiding those in areas like armaments, fossil fuels and genetic modification. It also sets limits on the amount of revenue that can be derived from gambling, tobacco and adult entertainment.
The FE Investments team, which has Brown Advisory US Sustainable Growth on its Approved List, said: “The fund provides good exposure to US companies that display long-term and ethical-growth characteristics.
“This added value can be seen particularly in the team’s sustainable business advantage analysis that it undertakes on each company, which ensures a thorough understanding of business models and management attitudes towards sustainability.”
Source: FE fundinfo
Man GLG Absolute Value is the second-largest of the young funds to win five crowns in its first rating. It was launched in June 2017 and has assets of £394.6m; its total return over three years is 24.93 per cent.
Managed by Jack Barrat, the fund resides in the IA Targeted Absolute Return sector and aims to make absolute returns over rolling three-year periods in all market conditions.
The fund looks for companies that are significantly undervalued by the market for its long book, while seeking out stocks that are overvalued with deteriorating outlooks for the short book.
Barrat is also a co-manager on the £1bn Man GLG Undervalued Assets fund alongside Henry Dixon. This is a well-respected fund, although it has underperformed because of its value approach.
Another notable young fund to win five FE fundinfo Crowns is Andrew Vaughan and Keith Ashworth-Lord’s CFP SDL Free Spirit fund. It made 34.10 per cent in three years to the end of June 2020, which was the highest return from the IA UK All Companies sector.
Ashworth-Lord – who also runs the CFP SDL UK Buffettology fund, which another of the sector’s best performers – recently told Trustnet that part of the funds’ success is down to the fact that their managers are not investment analysts or securities analysts.
“We’re business analysts – we try to get under the skin of the businesses we look at and find out what makes them special,” he explained.
“Quite simply, you’re not buying a gaming chip on a casino table when you buy a share in the stock market. You are buying a real economic interest in a real business. Therefore, all your effort should be directed at drilling down into that business.”