Fund Management Equity Index 2024

1. The Fund Management business can be cyclical

What worked well one year or in one period will not necessarily work well in another.

After an exceptionally strong decade, the past couple of years has seen a big rotation away from small growth stocks and particularly unprofitable or expensive growth. Although a handful of large growth stocks (driven by the tailwinds for artificial intelligence) have continued to do well, the impact of inflation and rising interest rates has levelled the playing field and funds with some valuation discipline have started to do better.

AllianzGI, Royal London, Man GLG, M&G and Artemis all have a number of strategies with a valuation discipline which have been doing well. Meantime fund groups which had funds which bought high growth at any price have really struggled the past couple of years.

2. M&G – The come back kid

It’s great to see that after a tough period M&G has now turned things around and has entered the top 10 of the index. M&G has changed a number of fund managers and brought in a lot of fresh blood in recent years which now seems to be paying off. Notably strong performers include M&G Asian, M&G Japan and M&G Japan Smaller Companies managed by Carl Vine and David Perrett who joined M&G in 2019. M&G has also experienced success with its global listed infrastructure fund which launched in 2017 under Alex Araujo.

Waverton, Canada Life, Polar Capital and Man GLG have all climbed more the 30 spots this year to receive the award for the ‘Elite Providers for Equities’.

3. Small cap struggles

It’s been no secret that smaller companies across the world with the exception of Asia have been struggling of late. Mega cap tech has dominated markets over the past five years whilst many smaller companies, such as those in the UK, have struggled. Those fund groups which have a mid and small cap bias relative to the index have struggled more than usual in the current five-year period.

4. A tough period for active management

AllianzGI has moved up from 10th to 1st in our index since two years ago but it has achieved this by maintaining its strong outperformance whilst others have fallen away. AllianzGI is top of the table with 17.90% but two years ago there were a number of funds with over 25% outperformance and the winner was at 45%.

It’s been a very tough period for active managers with an increase in funds flowing into passive investments, the market is experiencing a decline in efficiency. However, this presents an opportunity for active managers in the future. The narrowing gap in charges between active and passive management is also a positive development for the long-term viability of active management.

Currently, investing in passive funds means buying into a small number of companies as markets are highly concentrated and driven by a small number of mega cap winner. This could pose a risk to investors in the event of a reversal. Historically, small-cap companies have outperformed large and mega-cap counterparts, suggesting that a reversal would favour active management.

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.

Allianz Global Investors: 17.90% average outperformance

Whilst other fund groups’ performance has fallen away, AllianzGI has consistently delivered with 100% of their funds generating outperformance. Stand outs were the UK Listed Equity Income and UK Listed Opportunities fund which have benefited from a more favourable environment for value funds. On the other side of the world, the Allianz China A-Shares fund has fared better than many other Chinese funds in a difficult period with a return of 39% over the past years versus a negative return for the average Chinese fund.

Guinness Global Investors: 16.75% average outperformance

Guinness is a unique fund house which has been quietly going from strength to strength. It’s equally weighted portfolios are a feature across all its funds and a notable difference from most other active managers. Leading the charge are its popular Global Equity Income and Global Innovators funds which have delivered exceptionally strong and consistent performance.

Nordea: 14.42% average outperformance

Nordea has four qualifying funds which just met the minimum requirement to qualify for the index. All of these outperformed over the 5 year period. By far Nordea’s best performer was their Global Climate and Environment fund. Despite a difficult period for all climate funds recently the fund still returned 99% over the past 5 years easily beating the average global fund.

Royal London: 12.67% average outperformance

Royal London may not make as much noise as some groups but it has an excellent track record of delivering for clients. 17 of their 20 strategies outperformed over the 5 years, an impressive achievement by any measure. Leading the charge was the outstanding Royal London Global Equity Select which returned 134% over the past 5 years relative to 66% for the index.

What’s impressive about this fund is it’s less stylistic than many of its peers and has delivered in different environments. Whilst other more growth orientated strategies have fallen away the past two years, this fund has been left standing tall. Other strong performers were Royal London UK Dividend Growth and Royal London US Growth Trust

Man GLG: 9.72% average outperformance

Man GLG had a strong year, rising 31 places since we last ran the index in 2022. Man GLG Japan, which has a strong large cap value bias, has had a much better period in recent years as its style has come back into favour. The group’s UK funds, Man GLG Income and Man GLG Undervalued Assets have also benefitted from a better environment for value and continue to deliver strong long term numbers.

Fund Management Equity Index 2022 

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 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, FTF Clearbridge and FTF Martin Currie are evaluated 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 31/12/2023.

**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.