Five funds in the Investment Association’s multi-asset and absolute return sectors have achieved compound annualised returns of more than 10 per cent after being run by the same manager for at least the past decade, FE Trustnet research shows.
Most investors have a preference for managers that have built up a long track record on the same fund and with this in mind we recently reviewed the performance of every manager in the Investment Association’s equity sectors that has worked on a fund for the past 10 years or more.
Our research found that Giles Hargreave sat at the top of the table after making a 19.14 per cent compound annualised return since taking over the £1.6bn Marlborough Special Situations fund in July 1998.
Other managers that came out strongly include Alex Wright for his performance on Fidelity UK Smaller Companies (18.22 per cent annualised since February 2008), Martin Lau on First State Greater China Growth (16.92 per cent annualised since December 2003) and Ben Rogoff on Polar Capital Global Technology (15.44 per cent annualised since May 2003).
Performance of fund vs sector and index under Crawford
Source: FE Analytics
When we repeated this research for the IA Flexible Investment, IA Mixed Investment 40-85% Shares, IA Mixed Investment 20-60% Shares, IA Mixed Investment 0-35% Shares and IA Targeted Absolute Return sectors, the fund in the above chart came in first place.
Since launching the City Financial Absolute Equity fund in March 2003, FE Alpha Manager David Crawford has posted a compound annualised total return of 13.21 per cent. This equates to a 320.15 per cent cumulative return, far above the 31.04 per cent made by its average IA Targeted Absolute Return peer.
The £236.3m fund aims to generate positive absolute returns over rolling 36-month periods through a fundamental long/short strategy. FE Analytics shows the fund has been broadly successful in this aim, having made a positive return in 80 of the 87 three-year monthly rolling periods since its launch.
However, it must be noted that the fund does not act like a typical absolute return product and may not be suitable for the more cautious investor. For example, its annualised volatility since launch has been 14.66 per cent (compared with 2.70 per cent for its average peer) while its maximum drawdown stands at 24.32 per cent (against 6.40 per cent from the sector).
Robert Shelton comes in second place after making compound annualised returns of 11.99 per cent after running Newton Osprey since September 2004. In cumulative terms, this is a 377.7 per cent total return, compared with 153 per cent from its average IA Flexible Investment peer and 202.38 per cent from its FTSE All Share benchmark.
The £24.7m fund was only opened to external investors in 2015; it had effectively been a private unit trust that was not available on any platforms before this. Shelton is one of Newton’s longest-serving fund managers, having joined the group in 1984.
Shelton is currently cautiously positioned in his portfolio, arguing that equities are not cheap by historical standards, profit margins appear to be very high, there is a move away from free trade to protectionism and interest rates globally are rising. Some 31 per cent of the portfolio is held in UK assets, with 22.7 per cent in Europe, 20.1 per cent in Asia Pacific ex Japan and 16.1 per cent in North America.
Performance of fund vs sector and index under Geffen
Source: FE Analytics
Another IA Flexible Return fund comes next: Neptune Global Alpha, which has made 11.57 per cent annualised since launch in December 2001 with Robin Geffen at the helm. As the chart above illustrates, this is a 506.10 per cent total return over the same time frame.
Geffen is chief executive and founder of Neptune Investment Management. When building the portfolio, he draws upon the macroeconomic views, company analysis and global sector-based investment process utilised by the fund management house.
Square Mile Investment Consulting & Research gives the fund an ‘A’ rating and said: “This strategy should be considered a way to gain exposure to areas/sectors of the world most likely to experience strong growth, as identified by the investment team. This tends to mean that when its views prove to be correct, the rewards to an investor can be bountiful. However, if part of the process goes awry this can hamper returns.
“Ultimately this fund has an unencumbered investment approach that greatly benefits from having an experienced manager at the helm, insightful macroeconomic as well as global sector views, and an impressive array of supporting analysts and fund managers.”
Geffen has two mentions on the list of veteran managers posting double-digit compound annualised returns as his Neptune Balanced fund has made 11.17 per cent since he launched it in December 1998. The fund’s cumulative total return over this time has been 685.69 per cent, compared with 161.33 per cent for its average peer.
The manager uses the same process on this portfolio as he does on Neptune Global Alpha, although there is greater exposure to fixed income given the sector it resides in.
The final manager making the cut is Nick Greenwood, who has achieved compound annualised returns of 10 per cent since April 2003 on his LF Miton Worldwide Opportunities fund. In cumulative terms, this works out at 324.51 per cent.
Performance of fund vs sector and index under Greenwood
Source: FE Analytics
Unlike the other portfolios highlighted in this article, LF Miton Worldwide Opportunities is a fund-of-funds offering. Its top holdings at the moment include Phoenix Spree Deutschland, India Capital Growth, Artemis Alpha, Macau Property Opportunities and Atlantis Japan Growth.
While these are the only five longstanding multi-asset managers to make double-digit compound annualised returns over their time on a fund, others have come close.
John Chatfeild-Roberts and Algy Smith-Maxwell have generated 9.53 per cent annualised since October 2002 on their Jupiter Merlin Balanced Portfolio, Robin Hepworth has made 9.15 per cent annualised since November 1994 on EdenTree Higher Income and Philip Saunders made 8.90 per cent annualised since May 2004 on Investec Global Multi-Asset Total Return.