The top 10 equity fund management groups

James Yardley 10/04/2016 in Best performing funds

Knowing which brands are among the world’s most elite helps us make good buying decisions (or at least aspire to them!). If you’re after a diamond ring, you think Tiffany’s; a luxury watch, Rolex; a dream car, Aston Martin. But if you’re choosing investments … where do you start?

We put together an annual index that might help.

In the same way that Tiffany’s, Rolex and Aston Martin have earned their reputations through years of creating high quality products, we look at fund management groups whose funds have consistently delivered returns above their peers over a five year period.

The goal is to highlight the groups that have a proven track record of good stock-picking and are able to reliably repeat their process. The results are in for our Fund Management Equity Index 2016.

The index specifically analyses data for equity funds (keep a look out for our bonds index later in the year) and covers the majority of actively-managed equity funds recognised by the Investment Association. It compares them with their sector average.

Unicorn tops the list second year running

The top ten is a mix of groups from boutiques to global businesses. Key to their success was not their size or dominance, but a real focus on fund management.

For example, Unicorn tops the list for the second year running as a boutique, with average sector outperformance of 35.5% across its four funds. A larger group like Invesco Perpetual, though, which had 85% of their 26 qualifying funds outperformed by an average of 15% is also impressive.

Diamonds are forever; funds are for the long-term

You might not treasure your holding in a UK All Companies fund quite as much as you treasure your (or your partner’s) diamond ring, but it should be something you think about hanging on to for the reasonably long term, at least.

And while in good times, identifying funds that are delivering positive returns and beating their index benchmarks is a (relatively) easy task, in turbulent times, the choice can be less clear.

The reality is that very few investments will deliver income or capital growth year-in, year-out forever. That’s why the general wisdom when investing in equities is to go in for the long haul – so a few dips here and there will hopefully even out to positive returns.

So our index looks at outperformance above the average over five years. Even a good fund sometimes falls, but what you really want want to know is which funds and fund management groups can consistently do better than their peers – even if this sometimes mean losing less than everyone else.

When you look at this kind of data over five years, it can be one pretty good indicator of quality. Of course, you still need to look at a number of data to make your decision, but knowing the best performing brands should definitely help.

And looking back to last year’s index, it’s reassuring to note nine out of ten of last year’s top ten fund groups went on to outperform again over the following 12 months.

After all, making a good investment decision today might just make buying that dream car that little bit easier tomorrow (or perhaps a few more days down the track!).

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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.