Baillie Gifford American, Artemis US Equity and BNY Mellon Long Term Global Equity are among some of the best performing funds chosen by the FE Adviser Fund Index (AFI) panellists so far in 2018.
With markets favouring risk-taking in a subdued 2017, the best performing index was AFI Aggressive returning 15.4 per cent compared with the FTSE All Share’s 13.1 per cent gain.
This year, all the indices had outperformed the FTSE All Share to the end of September, with the AFI Aggressive index up by 2.76 per cent.
In comparison the FTSE All Share index is up by just 0.86 per cent and has even underperformed the most conservative of the three AFI Indices – AFI Cautious
Performance of indices in 2018
Source: FE Analytics
The portfolios are populated by the FE AFI panel of leading advisory firms who submit a maximum of 10 funds for inclusion in each band and are weighted. Panellists must assume that the client is saving for a pension to be taken at age 65.
https://www2.trustnet.com/learn/learnaboutinvesting/The-Adviser-Fund-Index.html
The AFI Aggressive portfolio is made up of funds suitable for a person in their late 20s; AFI Balanced funds are chosen for investors in their mid-40s; and, AFI Cautious is made up of funds for those in their late 50s.
Given their outperformance of the FTSE All Share index – a common benchmark for UK investors to measure performance – FE Trustnet decided to take a closer look at performance and find out the best-performing fund picks from each of the portfolios in 2018 to the end of the third quarter.
AFI Aggressive
In the 111-strong AFI Aggressive index, the best performer has been the four FE Crown-rated £1.7bn Baillie Gifford American fund, managed by Gary Robinson, Helen Xiong, Tom Slater, and Kirsty Gibson.
The fund is up by 41.15 per cent compared with a 12.84 per cent gain for the average IA North America sector fund and 14.2 per cent for the S&P 500 benchmark (in sterling terms), as shown below.
The Baillie Gifford team target long-term growth through a concentrated portfolio of between 30-50 stocks. Given its long-term perspective, the fund also has a low turnover with the managers taking a five-year view when investing and avoid being influenced by short-term trends.
Performance of fund vs sector & benchmark in 2018
Source: FE Analytics
As such over five years, the fund has delivered a 207.13 per cent return compared with a 110.96 per cent gain for the average peer and a 131.3 per cent return for the benchmark.
Indeed a number of top-performing funds from across the three indices were drawn from the US equity space given the strong run in markets seen there for most of this year.
Another top performer in 2018 was sister fund Baillie Gifford Global Discovery overseen by FE Alpha Manager Douglas Brodie. The £620m portfolio has delivered a total return of 30.34 per cent compared with a 6.44 per cent gain for the average IA Global fund.
Other stand-out funds from the AFI Aggressive index were Cormac Weldon’s Artemis US Smaller Companies and JPM US Smaller Companies – managed by Eytan Shapiro and Timothy Parton – up by 27.91 per cent and 24.38 per cent respectively.
AFI Balanced
The best performer in the 109-strong AFI Balanced fund was the aforementioned Baillie Gifford American fund: truly a fund suitable for all ages given its inclusion in all three portfolios.
The next best performer in the AFI Balanced index is another Baillie Gifford fund, which is perhaps unsurprising given the asset manager’s strong growth focus.
The four FE Crown-rated Baillie Gifford Japanese Smaller Companies fund is overseen by Praveen Kumar and Felicia Hjertman.
In the year to last quarter-end, the £804m fund has delivered a total return of 18.52 per cent compared with a 4.97 per cent gain for the average IA Japanese Smaller Companies fund and a 2.44 per cent for the average MSCI Japan Small Cap peer.
The managers invest in attractively-valued smaller companies with growth coming from innovative business models, disrupting traditional business practises, or market opportunities outside Japan.
Another strong performer was another fund managed by Cormac Weldon: the four FE Crown-rated Artemis US Equity.
The £42.6m fund was up by 15.96 per cent compared with a 14.2 per cent rise in the S&P 500 benchmark and a 12.84 per cent rise for the average IA North America fund.
AFI Cautious
With the top three funds in the AFI Cautious index having already been mentioned – Baillie Gifford America, Baillie Gifford Japanese Smaller Companies and Artemis US Equity – the next best performer was the £1.2bn BNY Mellon Long Term Global Equity fund.
The four FE Crown-rated BNY Mellon fund is team-managed by subsidiary Walter Scott has delivered a 14.73 per cent return during the first nine months of the year, compared with a 7.91 per cent gain for the FTSE All World benchmark and a 6.44 per cent return for the average IA Global peer.
Performance of fund vs sector & benchmark in 2018
Source: FE Analytics
Another top performer from the index was the five FE Crown-rated £15.6bn Fundsmith Equity fund, managed by FE Alpha Manager Terry Smith, which has delivered a 13.01 per cent return during 2018.
Other double-digit performers from the portfolio include the four FE Crown-rated LF Miton US Opportunities, which was up by 11.71 per cent, and another four crown-rated strategy: Merian Global Equity, with a gain of 10.25 per cent.