Lessons from a decade of FundCalibre

As FundCalibre celebrates its 10th anniversary, it’s a moment to reflect on how far we’ve come and the journey we’ve shared with some of the industry’s most distinguished fund managers.

Since our inception, our goal has been simple yet powerful: to help investors sift through the vast universe of funds with clarity and confidence. Over the past decade, our Elite Ratings have become a trusted symbol in the investment world.

The past decade in financial markets has been nothing short of extraordinary. From a global pandemic that ground economies to a halt, to Brexit, the rise of mega-cap tech, and the unrelenting march of climate change, investors have had to adapt to a world full of unexpected risks and unprecedented challenges. Yet, amid these storms, some managers have not only survived but thrived, emerging with valuable lessons and a renewed sense of optimism about the future.

In this reflective piece, nine fund managers share their insights into the events that have shaped their investment strategies over the past 10 years, the lessons they’ve learned, and what they expect to drive markets in the next decade.

What was the most surprising moment?

One of the defining features of the past decade has been the sheer unpredictability of the macroeconomic environment. Fund managers were forced to rethink their playbooks in the face of unexpected events that disrupted even the most well-laid plans. For many, unsurprisingly, the global pandemic was the most shocking event, with its far-reaching implications across every sector.

Nick Martin, manager of the Polar Capital Global Insurance fund, said: “The insurance industry expects natural catastrophes, wars and even pandemics. When they do come, they do with a twist and don’t usually fall nicely into what the underwriting models predicted.”

For FundCalibre, the global pandemic was also a significant test. As Juliet Schooling Latter, our research director, recalled, “Covid had to be a low point for me, trying to work in such worrying and difficult circumstances, with markets plummeting and the outcome entirely unknown. But it did serve to illustrate the importance of keeping your nerve when times are tough and placing your trust in those managers with the knowledge and experience to weather the storm.”

Reflecting on the past decade, Sid Chand Lall, manager of the IFSL Marlborough Multi Cap Income fund, names a slew of macroeconomic shocks that he couldn’t have anticipated, “but perhaps just as surprising has been the general lack of a ‘Buy British’ attitude towards our stock market.”

Meanwhile, Ben Wallace, co-manager of the Janus Henderson Absolute Return fund, recalls when bond yields turned negative globally from 2019 to 2022 as a significant moment. “In that environment it can be considerably more difficult to accurately value businesses. It was frustrating, but our job is to not swing and hope. In those environments, we look to keep the scoreboard ticking over, to minimise volatility, and avoid doing things just to be active.”

The sentiment was echoed by Richard Woolnough, manager of the M&G Optimal Income fund, who says although the financial crisis was probably the biggest challenge in his career thus far, some of the hardest moments have come more recently as bond yields headed towards zero. He said: “As a value investor, this made life difficult as the opportunity to find misplacing in the market narrowed. However, after navigating through that tricky period, we now find ourselves back in a situation where fixed income has an attractive point.”

The flexibility of active management

These unpredictable events prompted significant shifts in how fund managers approached their portfolios. In many cases, the core strategies remained intact, but managers learned to be more agile, ready to adjust to the new realities that unfolded around them.

As Andreas Zoellinger, co-manager of the BlackRock Continental European Income fund, highlights markets are constantly evolving and one only has to look so far as the transformation of the European market over the past decade. “Over time, we’ve seen the technology and industrials sectors gain prominence, the banking sector undergo substantial repairs, and the auto and energy sectors shrink in market cap terms considerably. This is underscored by trends such as reshoring, energy efficiency and AI which are driving improved earnings outlook and more international revenue.”

He added: “More recently, there’s also been a notable shift in dividend contributions, with more cyclical sectors now playing a larger role, while traditional dividend sectors have pulled back. The market is always evolving, and it is crucial for us not to become complacent. We must remain open to adjusting our investment approach to remain relevant.”

Sid Chand Lall echos these points saying, “any approach to fund management has to evolve constantly, at least to some extent, otherwise there would be no learning. Mine has certainly developed during the past decade, even if only in a tactical sense. But the Investment Association’s yield test is still my number-one priority.”

Adrian Frost, manager of the Artemis Income fund, agreed: “There has been plenty to cause pause for thought but at a minimum surely the cloud and AI are enough to lead to a reappraisal of some things we do. How much it changes from here we will only know with the benefit of hindsight but we will remain open-minded and patient about analysing these issues.”

Nick Martin shares that while his overall investment strategy hasn’t changed drastically, the pace of change in the insurance sector has accelerated. His fund continues to invest in a concentrated portfolio of specialty underwriting companies, but he has had to increasingly focus on emerging risks. “When managing a single sector fund, it’s critical to look outside your own ‘goldfish’ bowl and observe what’s happening in other industries and do your best to look around the corners that are coming.”

In a similar vein, Anthony Cross, manager of the Liontrust Special Situations fund, emphasises that while the core philosophy of his fund remains the same, the past decade has seen the investment team grow and evolve. He added: “This requires a different approach to making decisions and sharing information. I am very proud of how the team has developed and how our investment franchise has grown. Having watched fund management companies over the years, the building of teams and succession planning is often lacking, but I’m looking forward to continuing to build and develop our team.”

For Ben Wallace, the past decade was a lesson in the importance of flexibility. “The biggest joy and equally the biggest challenge of this job is that nothing is constant. You need to stay flexible and open to change; we have found that if we can maintain consistency within the investment process and remain open to opportunities, then you can reap the rewards over time.”

Navigating the ups and downs

Of course, the past decade wasn’t just about responding to crises — there were also high points, moments when hard work and careful strategy paid off.

For Sid Chand Lall, one such moment came at the end of 2013 when his fund led the UK Equity Income sector. “Being up over 43%, which is more akin to a growth fund, was an incredible high point.” Although 2022 was a tough year for performance, he remains confident in his approach: “The tough periods made us realise the fund has an unusual ability to recover to new highs from lows.”

Ben Wallace points to a similar dichotomy in his experience. “The low was definitely from 2019 to 2022 when negative interest rates made it difficult to find fairly valued companies,” he says. “But since September 2022 it’s been as good an environment for equity long/short strategies as we can remember. This is a great environment for absolute return investing and we remain focused on exploiting opportunities as long as it lasts.”

A small piece of advice

Looking back, many fund managers expressed the desire to be more aggressive during moments of opportunity. Sid Chand Lall, for example, reflects on missed chances during market sell-offs saying he’d be more aggressive. Adrian Frost and Nick Shenton, co-managers on the Artemis fund, would tell themselves to give their Bloomberg a breather “and your brain a teaser.”

While Amanda Sillars, investment manager on the Jupiter Merlin range of multi-manager funds, said if she could go back in time she’d focus on the product and the people: “Markets are inherently unpredictable, but you can control the quality of your product and the team you work with.” She added, “purposefully direct your energies to positive purposes, endeavours which really matter to others. It will encourage you to improve every day.”

The importance of your team was echoed by Anthony Cross: “Resilience is important in fund management and building resiliency is about making sure you take the long view. Surrounding yourself with a talented and supportive team, rewarding others with support and praise, and outside of work having interests that allow you to declutter and put things into perspective.”

Not to forget the significant power of independent thinking. “Trust your own judgement and be willing to diverge from the crowd,” is Richard Woolnough’s advice to anyone looking to find an edge. “If you always follow the consensus of the market, then you will only ever deliver the market beta. In order to outperform, you need to be comfortable in having a view that is against the consensus.” This mindset has been critical to Richard’s success, allowing him to uncover opportunities that others might overlook.

The next decade

Despite the challenges of the past decade, most fund managers are optimistic about the future. Nick Martin is particularly excited about the growing demand as insurance is expected to outpace global GDP growth, driven by emerging risks like cyber insurance and climate resilience. This expanding opportunity set plays perfectly into the hands of specialty insurers and “it’s likely insurance will continue to be the oil that greases the wheels of world trade for decades to come,” he says.

Amanda Sillars also sees a shifting market dynamic ahead. “I look forward to the stratospheric valuations of the Magnificent Seven tech giants compelling investors to divert their savings to energise the companies outside those seven,” she says. “This would empower these companies to invest and innovate…a powerful force for good.”

Meanwhile Ben Wallace remains optimistic on his asset class. “Demand for absolute return treaties was on a downward trend until recently, reflecting the market environment. Given alpha opportunities for fundamental stock pickers have come roaring back, we believe we’re in a strong position to construct portfolios that are arguably more robust. Confidence is higher than we have seen in a decade, and we are optimistic that this more rational market environment can continue as we look forward.”

Manager of the IFSL Marlborough Special Situations fund, Eustace Santa Barbara, believes “the pervasive negativity towards much of the UK equity market that we see today could be laying the foundations for attractive returns over the next decade. And I’m looking forward to improving confidence in the domestic equity markets.”

Meanwhile, his colleague Sid Chand Lall has his eyes set on outperformance and “looking forward to a cumulative 20-year track record by 2031 as primary manager of a fund I designed from scratch.” Adrian Frost from Artemis is simply looking forward to “continuing to patiently deliver returns for clients.”

After 23 years with BlackRock, Andreas Zoellinger says, “having launched the European Income strategy back in 2010, it’s time for me to pass the baton to my excellent colleagues, Brian Hall and Stuart Brown. Together they will make a fantastic duo, perfectly positioned to continue the success story that I’ve been fortunate to be a part of for so long.”

What’s next for FundCalibre?

At FundCalibre, we’re excited about the future as well. Darius McDermott, FundCalibre’s managing director, is optimistic about how we can continue to grow and adapt as the asset management industry changes. “In ten years’ time, I hope FundCalibre can continue to grow through the future regulatory challenges that will undoubtedly be presented.”

“Reflecting on the past 10 years, we are immensely proud of what FundCalibre has achieved. From our initial vision of providing free, independent fund and investment trust ratings, to becoming a trusted resource for investors and IFAs alike, the journey has been remarkable,” says Darius.

As Juliet Schooling Latter summed up beautifully: “It’s been a pleasure and a privilege to build FundCalibre into the well-known bastion of financial knowledge that it is today. We had a clear vision when we launched FundCalibre, wanting to help investors sift through the vast array of funds with a clear, simple rating and I’m proud of what we’ve achieved.”

As we move forward, our mission remains the same: to empower investors with the information they need to make informed decisions. And with the continued support of our incredible fund managers and team, we look forward to the next decade with excitement and confidence.

Here’s to another 10 years of growth, learning, and success!