Fund Management Equity Index 2022

Growth focused houses continue to dominate the top of the table.

Morgan Stanley, Baillie Gifford, T. Rowe Price, Martin Currie and Comgest are all in the top 20. Two companies: Baillie Gifford and T. Rowe Price have impressively been among the top ten companies in each of the eight annual surveys conducted by FundCalibre. This means both have equity teams that have outperformed for the past 12 years. Both are also larger groups with 16 or more qualifying funds. Maintaining such a level of consistency across that many products is extremely impressive.

The gap between growth and value is starting to narrow

While Morgan Stanley and Baillie Gifford continue to sit at the top of the charts, their overall outperformance has fallen considerably from a year ago after a difficult 2021. Morgan Stanley Global Opportunity with 95% outperformance and Baillie Gifford American with 186% outperformance were the groups’ top performing funds.

But value is still struggling

Houses with large ‘Value’ teams continue to struggle. M&G, Schroder and Invesco, for example, find themselves in the bottom half of the table. However, there are some signs that we might be reaching a turning point as interest rates start to rise. Despite the five-year underperformance, all three of these groups delivered a small outperformance in 2021 – possibly a good sign for the future.

Turnarounds are possible

Martin Currie has completed an extraordinary turnaround. Although just outside the top ten in 14th place, it was the second worst performing fund group when FundCalibre first ran the index in 2015. There have been quite a few changes over the past eight years, not least the takeover by Legg Mason. Zehrid Osmani, head of the global unconstrained team, joined from BlackRock in May 2018 and has proved to be a very important addition in helping to turn around a number of strategies. FTF Martin Currie European Unconstrained has been the top performer delivering 47% outperformance.

Size doesn’t matter

There are so many thousands of funds in the UK market that it can be quite intimidating when it comes to picking your investments. Often, investors end up falling back on the big familiar names and brands. But this might be a mistake. The UK market is blessed with an incredible array of quite brilliant smaller boutique managers but many of them go under the radar of average investors. Here are a few of the best performers over the past 5 years:

• MI Chelverton UK Equity Growth – (118% outperformance)
• Slater Recovery – (102% outperformance)
• Seilern World Growth – (80% outperformance)
• Aubrey Global Emerging Markets Opportunities– (68% outperformance)
• Fundsmith Equity – (48% outperformance)
• Montanaro UK Income – (39% outperformance)
• LF Lindsell Train UK Equity – (25% outperformance)
• LF Gresham House UK Micro Cap – (23% outperformance)
• TB Amati UK Smaller Companies – (21% outperformance)
• TB Evenlode Income – (20% outperformance)

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: 44.63% average outperformance

Having fallen to second place in the last annual report, Morgan Stanley has now claimed the top spot for the fourth time. All seven of its qualifying funds outperformed. The Morgan Stanley Global Opportunity fund was its standout success, returning almost 173% over the five-year period.

Baillie Gifford: 44.47% average outperformance

Ever-present in the top 10, Baillie Gifford continues to underscore its strength in the active management industry with 15 of its 17 qualifying funds outperforming. Once again, the American fund came out as its best performer, returning 283% over five years.

FSSA: 30.65% outperformance

FSSA continues to do well. It is substantially outperforming Stewart Investors, which has fallen to the bottom half of the table. FSSA Japan Focus was the outstanding fund delivering returns of 119% over five years.

Marlborough: 28.76% outperformance

Marlborough consistently appears in the top of the table and both its ten and five-year average outperformance are enormous demonstrating the huge value the company has delivered for investors over the past decade. Newly named IFSL Marlborough European Special Situations was among its best performers.

Brown Advisory: 27.48% outperformance

Brown Advisory is now appearing close to the top of the league table. It has a number of consistent funds, but part of the reason for its sudden jump is that it seems to have closed its Latin American fund, which was previously a serial underperformer.

Fund Management Equity Index 2021
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

The 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 31/12/2021.

**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.