The assistant fund manager at Rathbone Unit Trust Management said investors sometimes had a limited window to buy funds on an upwards trajectory and could miss out on improving returns if they avoided bottom-quartile funds or boutique managers with small resources.
Ms Shah pointed to the unexpected success of the Prusnik Asian Equity Income fund, which grew 57.03 per cent in less than three years before soft-closing in October 2013, and the “dramatic growth” of the MFM Slater Growth fund from June 2009 to March 2014 (244.05 per cent) despite a small team.
She said: “When we appraise a new fund, we start with a completely blank sheet of paper and gather evidence, taking track records if they’re relevant but otherwise resisting the simplistic view that bigger brands, more resources and more assets equate to better performance.
“We think buying boutiques gives fund-picking an edge. And as we’re unbiased, we find undervalued corners of the market that are undervalued. We will do the work to uncover managers that use their human capital efficiently.”
Mike Webb, chief executive officer at Rathbone, said risk-targeted portfolios will soon become as accepted as they are in the US, where “traditional” multi-managers are dying out.
Andrew Crawford, director of Norfolk-based GreenSky Wealth, said: “Our firm takes a similar attitude when picking funds directly, adopting a value-based approach where we only choose logical managers that stand a reasonable chance of outperforming in the long term. We take the funds apart, we love to meet the fund managers and see the whites of their eyes and we tend to focus on active equities, which helps us to keep things simple.”
IMA UK Equity Income
The 10 funds (out of 93) that stayed top quartile in the past two years
|CF Miton UK Multi Cap Income|
|Marlborough Multi Cap Income|
|PFS Chelverton UK Equity Income|
|Unicorn UK Income|
|Majedie UK Income|
|Standard Life Investments UK Equity Income|
|Royal London UK Equity Income|
|Invesco Perpetual UK Strategic Income|
|JOHCM UK Equity Income|