Analysis conducted by FundCalibre for its second Fund Management Index showed 86 per cent of the asset manager’s fixed income funds have outperformed their sub-sectors since 2010.
Insight and Invesco Perpetual were second and third, outperforming peers by an average of 6.3 per cent and 5 per cent, respectively.
FundCalibre’s analysis created sub-sectors against which it could gauge individual fund performance, before aggregating this at a company-wide level. In light of its findings, the ratings agency has called for a “rethink” of the Investment Association’s fixed income sectors, given the difficulty involved in comparing like for like within spaces such as the Global Bond sector.
The research, which follows an equivalent index for equity funds produced in February, saw eight fund houses awarded FundCalibre’s Elite Provider Rating for bonds.
But the study found RLAM to be a clear winner, given its typical bond fund outperformed its closest rivals by 3.3 percentage points. RLAM, Insight, Invesco and Kames were the most consistent groups, with more than 80 per cent of their bond funds outperforming peers’ averages over the five-year period.
“Royal London’s fixed income performance has been consistently exceptional and they were significantly ahead of the next closest group in the index,” FundCalibre said.
The ratings agency singled out Eric Holt’s Sterling Extra Yield Bond fund, as well as Mr Holt’s Ethical Bond, Jonathan Platt’s Corporate Bond and Paola Binns’ Sterling Credit funds.
FundCalibre managing director Darius McDermott also noted: “Groups that specialised in one area typically outperform. Pimco [sixth] and Insight [second] are known for their fixed income offerings and did not feature in the equity index.”
Similarly, the firm’s research into the best equity groups found the top three firms were dedicated primarily to stock-based portfolios.
Baillie Gifford and Invesco performed well in both the equity and fixed income indices, however.
FundCalibre also analysed fund houses’ risk-adjusted fixed income returns in order to assess how effective they were in managing volatility as well as performance. To do this, the firm compared each portfolio’s Sharpe ratio to their sector equivalent.
Kames, with its five products, topped the list as all of its bond funds outperformed their sub-sectors on a risk-adjusted basis.
RLAM had the second highest average Sharpe ratio, with 85.7 per cent of its funds outperforming their sub-sectors. Aviva and Invesco were third and fourth, respectively.
FundCalibre noted the highest Sharpe ratios appeared in the Strategic Bond sector, with the lowest average ratios found among funds invested in emerging market local currency debt.
The ratings agency said while the industry’s focus on individual managers and portfolios was only natural, an overall view of asset management firms was often equally important.
“[The index] shows a group’s culture, structure, personnel, alignment with investors and how specialised it is, all have considerable impact on its performance. Yet these are rarely prioritised by investors,” it added.
