Face to face with David Walton, manager of IFSL Marlborough European Special Situations
David started his fund management career at M&G, where he specialised in European small and...
Leading global stock markets haven’t risen very much over the last 22 years. Despite some peaks and troughs along the way, many are still trading close to levels seen at the end of 1999.
The good news is, plenty of investment funds have managed to make much better returns for investors over this period, proving the value of active management.
Here we take a look at three key markets – the UK, Europe and Japan, chart what’s happened over the last 22 years and highlight which funds have delivered the goods.
A lot can happen in two decades. Changes in government, economic problems, wars, and technological developments all have a role to play.
Our figures, which cover the period from 31 December 1999 to 29 December 2021, illustrate the point, with stock markets having experienced numerous highs and lows.
Key events have included the bursting of the so-called dot.com bubble, caused by unrealistic expectations – and valuations – being applied to technology-related stocks. There was also the fall-out from the devastating 9/11 terrorist attacks and the financial crisis of 2007 that had been triggered by excessive risk taking by global financial institutions.
More recently, we’ve endured a truly global crisis with the Covid-19 pandemic that continues to cause problems, almost two years since it first appeared.
An analysis of the FTSE All-Share Index, which comprises around 600 companies of various sizes, shows that since the end of 1999 it’s up 30.5%, or 995 points, from 3,242.06 points to 4,237.53 points*.
The performance of the FTSE 100, meanwhile, is even less impressive. The blue-chip index of leading UK-listed stocks had only gone up 7.5% from 6,930.20 points to 7,445.75 points*.
However, these meagre returns pale into comparison to the top performing actively managed funds over the same period. In fact, the standout names have delivered four figure returns!
Prime examples are the IFSL Marlborough Special Situations fund, which is up a staggering 1,686.6%**, according to our figures, and Fidelity Special Values, which has returned 1,148.1%**.
Schroder Recovery (611.8%**), IFSL Marlborough Multi-Cap Growth (545.3%**), and Schroder Income Growth (495.2%**) have been the next most successful Elite Rated funds over this time horizon.
The IFSL Marlborough Special Situations portfolio is currently run by experienced duo Guy Feld and Eustace Santa Barbara, who have forged an enviable reputation for being astute stock pickers. According to the fund’s most recent factsheet, the largest weighting of 3%^^ is in Watches of Switzerland. It is followed by SCA Investments Ltd, the recipe box business that’s better known by its trading name, Gousto, with 2.9%^^, and media group Future, which publishes titles such as Marie Claire at 2.8%^^.
Consumer discretionary stocks occupy the largest industry sector at 29.6%^^, followed by 24.5%^^ in industrials and 10.3%^^ in technology.
Obviously, Europe is a large, fragmented, and diversified market with a number of important stock market exchanges and indices.
We have focused on the performance of the Euronext 100, which is the blue-chip index of the pan-European exchange that contains the largest and most liquid stocks traded.
The figures show that it stood at 1,364.16 points on 29 December 2021 – 46% higher than its 929.86 point level as we approached the Millennium celebrations to usher in the year 2000^.
According to our figures, the top Elite Rated performers in Europe over the last 22 years have been Barings Europe Select Trust with an 889.9%** return, followed by Jupiter European with 831.4%**. GAM Star Continental European Equity (472.3%**), Threadneedle European Select (456.9%**), and IFSL Marlborough European Special Situations (447.6%**) have also done remarkably well.
The Barings Europe Select Trust is run by a team of four managers: Nicholas Williams, Colin Riddles, Rosemary Simmonds, and William Cuss. It aims to achieve capital growth by investing in Europe, with at least 75% of its total assets held in smaller companies that make up the bottom 30% of market capitalisation.
According to its most recent factsheet, the Trust has 92 holdings^^^, with the largest sector weighting being in industrial goods, followed by consumer goods, financial, and technology^^. The top country weighting, meanwhile, is the Netherlands with 14.9%^^, followed by 13.8%^^ in France, 13%^^ in Germany, 12%^^ in Italy and 11.1%^^ in Sweden. Its top holdings, meanwhile, are in chemical company IMCD, insurance group ASR Nederland, and Euronext, the pan-European trading bourse^^^.
Over in Japan, the Nikkei 225 – often just referred to as the Nikkei – is a price-weighted index for the Tokyo Stock Exchange that consists of 225 leading stocks. It was trading at 28,906.88 points on 29 December 2021, which represents a 53% increase over its 18,934.34 level at the back end of December 1999*.
While the returns generated by the best performing funds covering the Japanese markets are significantly lower than the UK and Europe, they’ve still been a lot better than the Nikkei 225.
The top three Elite rated funds in this region also represent a clean sweep by Baillie Gifford, whose portfolios have done tremendously well for investors.
The Baillie Gifford Shin Nippon Trust is top of the tree with a decent 298.9%** return, followed by the 272.8%** achieved by the Baillie Gifford Japan Trust, and the 202.8%** by Baillie Gifford Japanese Smaller Companies. AXA Framlington Japan was the fourth best performer (175.4%**) and Ballie Gifford Japanese was fifth (166.7%**).
The Baillie Gifford Shin Nippon Trust aims to achieve long-term capital growth by investing primarily in small Japanese companies. According to its most recent factsheet, the Trust, which is run by Praveen Kumar, has 23.9%^^ of its assets held within industrials, followed by 21.1%^^ in information technology, and 20%^^ in consumer discretionary names.
As far as holdings are concerned, the top holding is in Snow Peak, which manufactures and sells a range of outdoor products and accounts for 4.7%^^ of assets under management.
Next is the 4.3%^^ in Jeol, a leading name in electron microscopes, followed by 3.6% in RakSul, which helps companies embrace new technologies.
*Source: Google charts, 29 December 2021
**Source: FE fundinfo, total returns in sterling, 31 December 199 to 29 December 2021
^Source: Yahoo finance, 29 December 2021
^^Source: fund factsheet, 30 November 2021
^^^Source: fund factsheet, 31 October 2021