The Investment Adviser 100 Club breaks down the industry into 20 categories, and updates the members every year to ensure it contains the best the fund management industry has to offer.
Members are decided through rigorous number crunching by Investment Adviser’s editor. The methodology employed ensures members have outshone not just during the short term but also across a five-year period.
The Investment Adviser 100 Club enables mutual funds and investment trusts to compete for membership head-on, with trusts’ share price total returns considered. It also includes a selection of the best passive investment providers, making it an RDR-ready tool for intermediaries.
Calculations are based on funds’ total returns across one and five years relative to the total returns of a broadly relevant benchmark index or sector. The benchmark is chosen so a large group of funds can be reasonably compared with it. Data was sourced from FE Analytics and all performance figures quoted are bid-to-bid and rebased in sterling where currencies differed. The performance figures range to May 31 2014.
Potential candidate funds are ranked by their outperformance of a relevant benchmark across a year to May 31 2014. To check they are durable, long-term products, they are then screened to ensure they delivered strong five-year returns. A fund must have put a double-digit gap – 10 percentage points or more – between its performance and that of its index in the past five years for it to convince us it has long-term staying power.
We expect it to deliver at least half that level of outperformance across one year – five percentage points or more for equity funds – to ensure it has delivered the kind of returns that would place it in our club.
Sometimes it is impossible to find funds in a sector that outperform by this demanding margin of five and 10 percentage points, so we narrow the margin proportionally – to four and eight, then three and six and so forth.
In order to ensure the funds are truly relevant for intermediaries, the top candidates then undergo a further screening to exclude the following:
• Fund manager tenure of less than three years.
• Mutual funds with less than £50m, trusts with a market cap below £100m.
• Enhanced index or other ‘passive-plus’ funds.
• Products that are not UK authorised or available for distribution to retail investors, or funds that have an excessively selective distribution policy.
• Repeat funds from the same fund manager.
• Soft- and hard-closed funds, and funds earmarked for soft closure.
• Funds with no sterling share class.
• Funds that fail to make basic information such as performance, minimum investment, tenure etc. available to data providers and the public.
• In the Absolute Return sector, we assessed the funds’ long-term performance across one and three years, rather than the usual one and five. To screen out absolute funds with excessive long-only risk, those funds with a rolling three-year month-end maximum drawdown greater than 8 per cent are excluded.
When the best funds have achieved membership, the five large and mid-to-small investment managers with the most club member funds enter two provider categories.
Where managers have an equal number of funds, the combined one-year outperformance of the investment manager’s member funds breaks the tie. In a change to this year’s awards a large investment manager is defined as having at least £100bn in global assets, including the assets of its parent group.
The Passive Investment Groups category is populated based on the views of respected multi-asset fund managers who were asked to nominate their favourite three providers.
We would like to thank this year’s multi-asset experts Standard Life Investments’ Bambos Hambi, Architas Multi-Manager’s Steve Allen, Old Mutual Global Investors’ John Ventre, Seven Investment Management’s Peter Sleep, Whitechurch Securities’ Gavin Haynes, Armstrong Investment Management’s Patrick Armstrong and Aviva Investors’ Nick Samouilhan.
In addition, a panel of industry experts names one fund or asset manager from each category as a winner, with the results to be announced at the Investment Adviser 100 Club Awards ceremony in October.
One winner will be chosen from the five members of each category – leaving 20 elite funds and asset managers covering all the key areas of the retail fund landscape.
If your fund or company has been nominated as a member of the Investment Adviser 100 Club, you can secure your place at the awards ceremony or purchase member/winner logos by contacting danielle.david@ft.com
