Fund Management Equity Index 2020

James Yardley 01/03/2020 in Best performing funds, X Elite Funds news

Morgan Stanley has completed a hat trick by claiming the number one spot in the FundCalibre Fund Management Equity Index for the third successive year.

Each year, FundCalibre’s research team identifies the asset management companies that have the most consistently strong stock-picking teams.

Looking back over the past five years, the analysis shows which companies have demonstrated they can add value for their equity investors year in, year out.

The result is the annual Fund Management Equity Index and the award for the ‘Elite Providers for Equities’ – now both in their sixth year.

Morgan Stanley makes it three years in a row at number one

Morgan Stanley remains top of the leader board, as its US and global franchises continue to significantly outperform their peers over five years. Its average fund returned 44.58%* more than its peers over the five years to 31 December 2019.

Ever-present in the top 10 in the past six years, Baillie Gifford has risen to second in the index with 14 of its 15 eligible funds outperforming across numerous parts of the globe. Its average fund outperformed its peers by 31.7%* over the period.

Having seen global stock markets sell-off at the end of 2018, few would have predicted 2019 would have been such a strong year for equities, with global returns in excess of 20%** and growth the dominant investment style once again. The top 10 companies consolidated their position with seven groups from 2019 re-appearing in 2020.

A decade of success

Two companies; Baillie Gifford and T. Rowe Price, have been among the top ten companies in each of the six annual surveys conducted. In second and fifth place respectively this year, this means that both asset management businesses have equity teams that have outperformed for a decade.

Both are also larger groups with 15 qualifying funds apeice. Maintaining such a level of consistency across that many products is extremely impressive.

Top ten fund groups 2020

Rank 2020Rank 2019Fund group5 yr. ave. outperformance% of funds outperformingNo. of funds
11Morgan Stanley44.58%83.33%6
23Baillie Gifford31.71%93.33%15
32Man GLG24.09%75%4
4New EntryWellington24.01%100%7
54T. Rowe Price22.67%86.66%15
96Polar Capital16.31%66.67%9

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1. Consistency demonstrates skill, not luck
With seven out of last year’s best ten groups remaining at the top and, even more impressively, two of these companies having been in the top ten in each of the past six annual surveys, the Fund Management Index demonstrates beyond doubt that consistent outperformance of active equity fund managers is not a myth: outperforming for a decade is a result of pure skill.

2. Fund research is crucial
The huge difference in performance between the best and worst groups also demonstrates that researching fund picks for a portfolio is crucial. The average fund’s outperformance from the top group, Morgan Stanley, was 74%* higher than the average fund’s results from the bottom group.

3. Size doesn’t matter, but focus does
The index shows that size really doesn’t matter. The top ten groups were a mix of three smaller equity franchises and seven larger ones. However, the best companies have a focus on investment management. Companies that have a wider overall remit, like banking organisations, continued to disappoint at the bottom end of the list.

Fund group highlights

There were 15 newcomers to the table this year – perhaps an indication of the growing choice for investors in the UK. Wellington was the standout newcomer, debuting in the top 10 at number four. Other strong debutants included Nomura (15), Brown Advisory (16), Neuberger Berman (19) and Quilter (24).

The biggest climbers this year (excluding the newcomers) were Unicorn (+31 places), Legg Mason Martin Currie (+26), Allianz (+18), SVM (+17) and GAM (+16). Investment boutique Unicorn Asset Management is best known for its skill in managing funds investing in UK small and mid-cap companies, although it also has a presence in the VCT market. Its UK Growth fund has a particularly strong 2019. Legg Mason Martin Currie has also seen a strong bounce in performance, aided by its Emerging Markets and US Unconstrained funds – it will be interesting to see how the acquisition by Franklin Templeton impacts the fund range.

A strong year for equities in 2019 has resulted in five fund groups now having each of their qualifying funds outperforming over the past five years. The list is spearheaded by Marlborough Fund Managers with a total of nine outperforming funds, followed by Hermes and Wellington (both seven), SVM (five) and Unicorn (four).

The biggest fallers were Stewart Investors (-63 places), Miton (-43), JO Hambro Capital Management (-39), Schroders (-26) and Invesco (-25). Stewart Investors’ investment style is generally less risky than that of other funds investing in the region, and the team tends to underperform in strongly rising markets (which we experienced in 2019) and outperform in falling markets (which we experienced at the end of 2018). This makes their risk-adjusted performance stronger. JOHCM, Schroders and Invesco suffered due to the value-style of a number of their funds remaining out of favour.

Top five equity fund groups

We take a look at the top five fund houses in a bit more detail. Percentage figures show the average fund’s five-year outperformance for each fund group.

Morgan Stanley: 44.58% average outperformance

Morgan Stanley has managed to retain its position at the top of the index for the third year in a row. The group has seen five of its six eligible funds markedly outperform, with its US and global offerings leading the way. The Morgan Stanley Global Opportunity fund was the stand out product once again, returning more than 170%* over the five-year period.

Baillie Gifford: 31.71% average outperformance

Ever-present in the top 10, Baillie Gifford continues to underscore its strength in the active management industry with 14 of its 15 funds outperforming. What makes the firm stand out is this performance is attributable to various funds in different global markets. Once again, the American fund came out as its best performer, returning more than 156.9%* over five years.

Man GLG: 24.09% average outperformance

Man GLG completes an unchanged top three in the list from 2019. Three of its four fund outperformed, with its Continental European Growth and UK Income funds doing particularly well.

Wellington: 24.01% outperformance

Wellington is the newcomer to the top five, but it has strong credentials with all seven of its eligible funds outperforming. The firm’s Global Quality Growth Strategy has returned 121.91% over five years*.

T. Rowe Price: 22.67% outperformance

T. Rowe Price has consistently proven its ability as a leading active management provider in the UK. Like Bailie Gifford, the firm has always been in the top 10 of the index and has continued that trend this year with 13 of its 15 funds outperforming. The firm’s Global Focused Growth Equity, US Large Cap Growth Equity and US Blue Chip Equity have all performed well.

Our annual Fund Management Equity Index looks at all actively managed equity funds recognised by the Investment Association, and compares them with their sector averages over a five-year time frame*.

Each asset manager’s funds are then grouped together to calculate its average fund performance. Companies must have a minimum of four qualifying funds to be included in the index.

Funds excluded from the index***

  • Passive funds
  • All non-equity funds
  • Multi-manager funds
  • Institutional funds
  • Charity funds
  • Funds with a track record of less than five years
  • Funds not in an Investment Association (IA) sector
  • Fund houses with fewer than four qualifying funds
  • Some specialist funds in the IA Specialist sector which are difficult or impossible to compare including energy and agriculture funds

How we create the index

  • We create a list of qualifying funds (see exclusion list above)
  • We measure every qualifying fund’s over or underperformance after fees against its respective IA sector average over the past five years. (We use main units as defined by FE Analytics). For some specialist funds we create our own sub-sector or measure against an appropriate benchmark. IA Unclassified equity funds are also compared against an appropriate benchmark or peer group
  • We group each asset manager’s funds together
  • We work out each asset manager’s average fund’s over or underperformance
  • We calculate what percentage of each group’s funds outperformed
  • Some decisions taken in the production of this index are inevitably subjective and are based on the opinion of FundCalibre’s research team
  • Every effort is taken to be as fair and accurate as possible
  • All data is sourced from FE Analytics

Breaking down asset managers into fund groups

Where appropriate, we have broken down fund houses into different fund groups. Some asset managers operate independently but remain part of a wider group. For example, AXA Framlington and AXA Rosenberg are presented separately.

Weaknesses of the index

The index does not account for survivorship bias. Funds that have been closed down or that have been merged with other funds are not included in these results.


*All data used to compile the Fund Management Equity Index is taken from FE Analytics. All cumulative statistics % change bid to bid, net income reinvested, five years to 31/12/2019.

**Source: FE Analytics, total returns in sterling, calendar year 2019, MSCI World and MSCI ACWI Indexes.

***Please note FundCalibre has included or excluded funds in very few cases at its discretion, based on what it believes will provide the fairest comparison of each fund group’s performance over the time period.

These are purely statistical charts. While every effort has been made to ensure the accuracy of this information, FundCalibre takes no responsibility for any errors, omissions or inaccuracies therein.

Please note the Fund Management Equity Index does not constitute investment advice. If you are in any doubt as to the suitability of any investment you should seek professional advice. An appearance of any fund on this index is not an indication it should be bought, sold or switched.

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice.Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.