Given the long-term nature of investment, it’s always comforting when a fund manager has built up a long track record on a portfolio rather than moving to a new product every few years. 
In keeping with this, FE Trustnet has examined the performance of every fund manager in the Investment Association universe that has worked on a fund for the past 10 years or more.
We then worked out the compound annualised total returns of each of these funds since the manager was appointed to the portfolio to discover which have made the most money for their investors.
This found that UK equities is home to a large number of the top performers.
Source: FE Analytics
There are 112 funds run by longstanding managers that have achieved compound annualised growth of more than 10 per cent over the tenure and 20 of these reside in the IA UK All Companies sector, with another 13 in IA UK Smaller Companies.
Despite being known as one of more challenging areas for active managers, the IA Global sector has also performed relatively well with 16 of its veteran managers making double-digit annualised gains over their time on the funds.
Turning to the individual funds and a member of the IA UK Smaller Companies sector is at the top of the list. Since taking over Marlborough Special Situations in July 1998, FE Alpha Manager Giles Hargreave has generated compound annualised total returns of 19.14 per cent.
The £1.6bn Marlborough Special Situations fund has made a 3,155.89 per cent total return while being managed by Hargreave, which compares with a rise of ‘only’ 558.61 per cent from its average peer in the IA UK Smaller Companies sector.
Adrian Lowcock, investment director at Architas, described Hargreave as “quite a traditional stock-picker” in that he is very methodical, has strong relationships with his underlying holdings and uses a well thought-out process but added that a strong differentiator is his approach to risk management.
“Giles is very knowledgeable of the small- and micro-cap space, spends a lot of time meeting with company management and really gets to understand businesses. However, his real skill set is portfolio construction. He runs a diversified portfolio and each position is very actively managed. What he’s doing there is looking to manage risk in each investment,” Lowcock explained.
“Effectively, he operates in a space where companies can easily go bankrupt; even if you fully understand the business, there’s no guarantee of success. Giles is very good at managing that risk and cutting his losers, so if a story isn’t panning out as expected he will get out very quickly.”
Performance of fund vs sector under Hargreave
Source: FE Analytics
Another UK smaller companies manager comes in second place in this research: FE Alpha Manager Alex Wright for his performance on Fidelity UK Smaller Companies, which he launched in February 2008.
Over this time, Wright has achieved compound annualised returns of 18.22 per cent, which has resulted in a 457 per cent cumulative total return. This compares with a rise of 204.37 per cent from its average peer and a 203.39 per cent return from its Numis Smaller Companies ex ITs benchmark.
The fund, which saw the addition of Jonathan Winton as co-manager in March 2013, is built around a portfolio of unloved companies that the managers believe are entering a period of positive change. Square Mile, which gives the fund a ‘AA’ rating, said this approach has delivered “impressive” returns but noted that there may be periods when it underperforms.
“Both Alex Wright and Jonathan Winton are clearly committed to a contrarian investment philosophy and both benefit from Fidelity's impressively resourced research department,” the group added. “Wright swiftly made his mark in the running of this strategy and the first few years of fund's performance were extraordinarily good.”
IA UK Smaller Companies members are well represented in this research, with Hargreave’s Marlborough UK Micro Cap Growth, Daniel Nickols’ Old Mutual UK Smaller Companies and Neil Hermon’s Janus Henderson UK Smaller Companies funds being among the top 10 for highest compound annualised returns under their longstanding managers.
Chinese equity funds also put in a good showing with two near the top of the table. The £507.1m First State Greater China Growth fund has a compound annualised return of 16.92 per cent since December 2003 under Martin Lau; this translates to an 864.27 per cent cumulative return.
The fund focuses on high-quality growth companies, which Square Mile said means it could be an option for investors seeking long-term exposure to China in a conservative manner. Lau and co-manager Sophia Li believe in the responsible stewardship of capital, leading to a preference for management teams with integrity, a longerterm vision of growth and returns and a broader sense of corporate responsibility.
Source: FE Analytics
Schroder ISF Greater China, which has been managed by Louisa Lo since September 2002 and has compound annualised returns of 15.87 per cent since then, is the other China fund at the top of the list.
Lo has close to 25 years of experience in Asian equity investing and her stock-selection process focuses on growth and valuation. The manager uses the same approach on her Schroder ISF Taiwanese Equity, Schroder ISF Emerging Asia and Schroder ISF China Opportunities funds.
Other notable managers that have achieved double-digit compound annualised returns over the long run include Ben Rogoff on Polar Capital Global Technology (15.44 per cent since May 2003), Anthony Cross on Liontrust Special Situations (13.88 per cent since November 2005) and Nick Train on LF Lindsell Train UK Equity (12.68 per cent since July 2006).