Figures provided to Investment Adviser by Morningstar reveal a number of firms’ fund ranges have held up well on a risk-adjusted basis over the past five years, with “success ratios” as high as 80 per cent.
But the data provider’s analysis also revealed a sharp drop off outside the top tier. Only 12 groups – the top 10, plus Fidelity and Investec – were deemed to have produced the relevant returns for more than three out of every five products.
The ratio was calculated by analysing the number of a firm’s UK-domiciled funds that produced risk-adjusted returns in excess of peers’ over a five-year period. That figure was then divided by the total number of funds on offer at the beginning of the period.
Christopher Traulsen, Morningstar’s director of manager research for Emea and author of the report, said success ratios of between 50 and 60 per cent, while not “fabulous”, were higher than the industry average.
He suggested large fund houses’ attempts to cover all bases frequently went against them when it came to consistent performance.
“This presents a lot of challenges and you’re likely to find pockets of excellence and pockets of mediocrity,” he said.
However, he noted some large firms did well. Columbia Threadneedle was eighth with 64.2 per cent, which Mr Traulsen said was a “good result” across the 65 funds assessed.
He said Invesco’s performance was spread across its equity and bond funds, though others’ strengths were focused on more specific areas. Mr Traulsen also singled out Baillie Gifford’s “steadier approach” than many of its peers.
Of the other groups making up the top 10, Mr Traulsen did suggest Margetts, as a multi-asset specialist, may have benefited from the period of assessment being limited to five years.
He said: “If you have the right directional allocation for the right period of time, you will look good in your peer group. That may not be a great predictor on how you do over a longer period. That isn’t to say [Margetts] is not good at what it does.”
Mr Traulsen said he had included funds that had since been closed or merged away as these often represented failures in the eyes of investors. The study only included fund houses with more than 10 funds in operation at the end of the period.
|Company||Five-year risk-adjusted success ratio||Funds included|
|Royal London Asset Management||79%||19|
|Sarasin & Partners||63.6%||10|