Are UK government bonds a good investment: In-depth guide to understanding UK gilts
Fixed income is a catch-all label for different types of bonds, including corporate or government...
Fund Management Equity Index 2021
Baillie Gifford knocks Morgan Stanley off the top spot
Having been there or thereabouts for the past decade, Baillie Gifford has finally claimed the top spot in FundCalibre’s seventh annual Fund Management Equity Index, pushing three-times winner Morgan Stanley into second place.
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 seventh year.
Baillie Gifford finally claims first place
Having claimed the top spot for three consecutive years, Morgan Stanley was pushed into second place this year by Baillie Gifford, whose average fund returned 82.16% more than its peers over the five years to 31 December 2020. This is the highest average five year outperformance in the history of the survey.
Ever-present in the top 10 in the past seven years, Baillie Gifford has risen to first place in the index with 15 of its 16 eligible funds outperforming across numerous stock markets. The firm was helped in no small part by Baillie Gifford American, which was the best performing fund of the year, returning 121.84% – 105.67% more than its average peer. A further four Baillie Gifford funds outperformed their sector average by 50% or more.
Top ten fund groups 2021
| Rank 2021 | Rank 2020 | Fund Group | 5 yr ave. outperformance | % of funds outperforming | Average OCF | No. of Funds |
| 1 | 2 | Baillie Gifford | 82.16% | 94% | 0.62% | 16 |
| 2 | 1 | Morgan Stanley | 73.00% | 100% | 0.91% | 4 |
| 3 | 7 | Comgest | 36.68% | 75% | 0.95% | 4 |
| 4 | 5 | T. Rowe Price | 31.39% | 75% | 0.92% | 16 |
| 5 | New | FSSA | 26.44% | 75% | 1.09% | 4 |
| 6 | 4 | Wellington | 23.05% | 80% | 1.04% | 5 |
| 7 | 35 | Matthews Asia | 22.32% | 67% | 1.29% | 9 |
| 8 | 38 | JP Morgan | 18.77% | 65% | 0.81% | 20 |
| 9 | 26 & 57 | Premier Miton | 18.67% | 64% | 0.92% | 11 |
| 10 | 25 | Legg Mason Martin Currie | 16.69% | 60% | 1.07% | 5 |
What does the Fund Management index tell us?
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 25th place to 10th. 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 groups and funds
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.
View the methodology
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.
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.
