Fund Management Equity Index 2021

1. Two companies shine over more than a decade
Two companies; Baillie Gifford and T. Rowe Price, have been among the top ten companies in each of the seven annual surveys conducted by FundCalibre. In first and fourth place respectively this year, both have continued to improve on their positions and have equity teams that have – quite spectacularly – outperformed for the past 11 years. Both are also larger groups with 16 qualifying funds each. Maintaining such a level of consistency across that many products is extremely impressive.

2. Five of the top ten remain in place
Five of last year’s top 10 also feature again this year. Importantly, these five are a mixture of both large and small management houses, indicating success can be found across different business models. Whether it is a boutique fund house or a global asset manager, if the process and team are right for the fund, it can outperform.

3.Five groups surge into the top 10
The recently renamed FSSA was a new entry straight in at number 5 now that it has enough qualifying funds to be included in the survey. Having moved up 26 places last year, Legg Mason Martin Currie continued its phenomenal rise, rising from 25^th place to 10^th. Matthews Asia rose 28 places to number 7 and JP Morgan rose 30 places to number 8. And having merged its two businesses in November 2019, Premier Miton made its first appearance in the top of the table at number 9. A lot of their outperformance came from the continued dominance of growth styles and having been invested in COVID winners rather than COVID losers.

4. Charges matter
Baillie Gifford also wins on charges. It has the cheapest average ongoing charge of all the companies – even across its most popular funds. Some are even cheaper than passive funds. Charges matter as they compound over time. So having a lower charge really helps performance as well as demonstrating a really good attitude of putting the client first. This can run right through the culture of the firm into the stock picking and shows in the performance numbers.

5. Fund research is crucial
The index also highlights that there is a huge difference in performance between the best and worst groups. The average outperformance of top group, Baillie Gifford’s funds, was almost 100%* higher than that of the bottom group, Sanlam. So good fund research is key to maximising the potential of your investment portfolio.

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.

Baillie Gifford: 82.16% average outperformance

Ever-present in the top 10, Baillie Gifford continues to underscore its strength in the active management industry with 15 of its 16 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 402%* over five years.

Morgan Stanley: 73.00% average outperformance

After three years at the top Morgan Stanley had dropped to second place, but all four of its eligible funds have outperformed. The Morgan Stanley US Advantage fund was the stand out product, returning almost 232%* over the five-year period, but Morgan Stanley Global Opportunity was a close second, returning more than 220%.

Comgest 36.68% average outperformance

Comgest completes the top three in the list. Three of its four funds outperformed, with its Growth Japan fund doing exceptionally well. It returned 164% over the period. All Comgest funds have the same philosophy and process and the company is entirely owned by its employees through a partnership structure. Approximately 75% of staff are shareholders.

T. Rowe Price: 31.39% 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 12 of its 16 funds outperforming. The firm’s Global Technology Equity fund was its best performer, up almost 250% over five years.

FSSA: 26.44% outperformance

The recently renamed FSSA was a new entry at number five now that it has enough qualifying funds to be included in the survey. With three out of four qualifying funds outperforming, like Comgest, it was the Japan Focus fund that stood out, returning just shy of 165% over five years.

Fund Management Equity Index 2020
Fund Management Equity Index 2019
Fund Management Equity Index 2018
Fund Management Equity Index 2017
Fund Management Equity Index 2016
Fund Management Bond Index 2015

Our annual Fund Management Equity Index looks at all actively managed equity funds recognised by the Investment Association and available on platforms for retail investors. It then 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
• Funds not available on at least one recognised major platform (as defined by FE)
• 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 fundinfo). 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 fundinfo. All cumulative statistics % change bid to bid, net income reinvested, five years to 31/12/2020.

**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.