Opinion  

100 Club is proving to be a reliable talent spotter

John Kenchington

As we gear up to roll out a series of Investment Adviser 100 Club roadshows in the coming weeks, it seems like a good moment to check up on the fortunes of funds that won membership to the Club last year.

The results are encouraging – the vast majority of our Investment Adviser 100 Club 2013 members have had a stonking time since being selected by us in July last year, suggesting the Club could be an indicator of future success.

The 100 Club is a selection of the UK’s best-performing funds and asset managers in an array of categories, put together annually using our proprietary quantitative process.

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In order to win entry to the Club, funds have to have had not just a good year, but also outstanding long-term returns. They also have to meet a range of screening criteria, including being of sufficient size and not soft-closed.

In the all-important UK Equity category, Schroder Recovery stands out, having gained 33.9 per cent in the past 12 months to rank 10th out of the 265 funds in the IMA UK All Companies peer group according to Morningstar data correct to February 14.

100 Club member Standard Life Investments UK Equity Unconstrained now ranks top in the IMA UK All Companies sector in terms of its five-year returns, having gained a stunning 356.6 per cent after a solid 12 months.

In our UK Equity Income category performance has also been strong, with the Lowland Investment Company winning out with a solid 37 per cent one-year gain.

Across the other categories, Legg Mason Japan Equity, Kames Ethical Cautious Managed, Aberdeen Property Share, the Baillie Gifford Japan trust, the Biotech Growth trust and RCM Technology trust all rank top in their respective sectors for 12-month returns.

The only disappointing result worth mentioning was the Investec Emerging Markets Local Currency Debt fund run by Peter Eerdmans, which has suffered more than most amid the emerging market debt rout, losing 20.7 per cent in the past year.

For me, the success of the 100 Club funds robustly disproves any claims that there’s no such thing as talent in the fund management industry, or that active management doesn’t work.

With a rigorous, quantitatively driven system and some quality checks and balances, it is absolutely possible to identify talented fund managers, and they will tend to outperform the pack consistently.

The current debate about who is able to shave the most basis points of management charges on their funds’ prices is misguided. Picking the right asset class and region and then finding the talented managers drives returns.

John Kenchington is editor of Investment Adviser