Funds managed by Aberdeen Standard Investments, Hargreaves Lansdown, Old Mutual and Baillie Gifford are notable examples of UK equity portfolios that have achieved the most individual days of top-decile returns, FE Trustnet research shows.
While no-one is suggesting that investors should base their decisions on the daily movements of funds, we thought it would be an interesting exercise to find how which members of the IA UK All Companies and IA UK Equity Income sectors had built up the most individual days in the top decile of their peer group over the past decade.
After running returns of both peer groups for every day going back to 1 July 2008, the fund illustrated in the chart below had the most top-decile results.
Performance of fund vs sector and index between 1 July 2008 and 30 Jun 2018
Source: FE Analytics
Standard Life Investments UK Equity Unconstrained has 3,093 days of performance that we reviewed and it was in the IA UK All Companies sector’s first decile for 982 of them – or 31.7 per cent of the time. On a cumulative view, its 288.17 per cent total return is the fifth highest in the peer group.
The £681.5m fund is managed by Wesley McCoy. He launched the strategy in 2005 but departed Standard Life Investments in 2008 to pursue charity work in Malawi. He returned to the asset management house in 2012 and was appointed to the fund in June 2015 after then-manager Ed Legget left to join Artemis.
Square Mile Investment Consulting and Research, which gives the fund an ‘A’ rating, said: “For investors looking for a truly actively managed UK equity fund that pays little regard to the underlying index, this strategy is worth consideration. In effect the manager is looking to outperform by allocating capital to his best ideas, regardless of the size of the company in the index, but within a sufficiently diversified portfolio.”
While Square Mile noted that the fund can have “impressive periods of returns”, it added that it can also go through times of underperformance. This is suggested through our research, which shows that it has been in the 10th decile in 25.3 per cent of the days we examined.
Standard Life Investments UK Equity Unconstrained isn’t the only fund managed by Aberdeen Standard Investments to achieve a significant number of days in their sector’s first quartile. The table below shows all the IA UK All Companies and IA UK Equity Income funds that have spent more than one-quarter of individual days at the top of their peer group.
In total, there are 21 funds achieving this, out of 351 that we reviewed. Furthermore, some 151 of these funds have been in the top decile of their peer group in more than 10 per cent of the days reviewed.
As can be seen, Standard Life Investments UK Equity Recovery has spent 31.7 per cent of its 2,893 days in the top decile of the IA UK All Companies sector; however, it has also been in the bottom decile for 26.8 per cent of them.
Source: Finxl
Thomas Moore’s £1.4bn Standard Life Investments UK Equity Income Unconstrained fund is the highest ranked £1bn-plus fund to be found on the list, coming in seventh place after spending 28.1 per cent of its days in the first decile.
Other giant funds of note include HL Multi Manager Income & Growth. Over the full 10-year period, the £3.3bn fund has made a 132.30 per cent total return, which is the 12th highest in the IA UK Equity Income sector.
Managed by Hargreaves Lansdown’s Lee Gardhouse and Ellen Powley, this multi-manager fund is designed to act as ‘one-stop shop’ for the platform’s favourite equity income managers. It counts the likes of Jupiter Income, JP Hambro UK Equity Income and Artemis Income among its largest holdings.
Other large UK active equity funds that have spent more than 10 per cent of their days in the top decile include Old Mutual UK Mid Cap (25.2 per cent), Majedie UK Equity (17.9 per cent), TB Evenlode Income (15.8 per cent) and LF Lindsell Train UK Equity (15.6 per cent).
But several passive funds also appear on the list. The £6bn Scottish Widows UK All Share Tracker, for example, has the exact same number of days as HL Multi Manager Income & Growth in the top decile (777, or 25.4 per cent).
Other trackers making the cut include SSgA UK Equity Tracker, Vanguard FTSE UK Equity Income Index and L&G UK Index Trust.
Source: Finxl
Trackers are more common, however, when we look at the bottom of the list as many have spent the fewest days in their sector’s top decile.
That said, it’s important to note that trackers have accrued the least amount of time in the bottom decile as well – highlighting that while they rarely shoot the lights out, passives can be hit by fewer blow-ups than active management.
A good example of this is the fund that appears at the very top of the above table. Janus Henderson UK Index was in the top decile of the IA UK All Companies sector for just two days of the 3,053 we reviewed but it only spent four days in the bottom decile.
That’s the case for the majority of the funds on the table. Only two of the 24 – HSBC FTSE All Share Index and HSBC Merit UK Equity – have more than 10 per cent of their days in the bottom decile; for all the others, less than 3 per cent has been at the bottom of the sector.