Regular readers may recall that for several years the UK equity section of our database was dominated by four funds: Lindsell Train UK Equity, Ninety One UK Alpha, Liontrust Special Situations and Man GLG Undervalued Assets.
But the dominance of this part of our database by just four funds has become a thing of the past - in part due to the fact that some of the big four have fallen away but also because some insurgents have stormed the castle.
For starters, Ninety One UK Alpha is now only held by one of the allocators in our database, having been held by seven almost exactly two years ago. The departure of Simon Brazier will almost certainly have played a role here.
But Man GLG Undervalued Assets has also suffered - it has gone from five holders to three.
So who has benefited? Well three funds in particular which are all now held by six allocators in our database: Royal London Sustainable Leaders, Jupiter Special Situations and JOHCM UK Dynamic. Artemis UK Select and Chelverton UK Equity Growth are nipping at their heels with five holders each.
One of the obvious results of this shift is that it has meant more allocators are picking a style camp.
The "big four" were fairly evenly split with one growth style fund (Lindsell Train UK Equity), one value style fund (Man GLG Undervalued Assets) and two mixed funds (Ninety One UK Alpha and Liontrust Special Situations).
Of the five most popular funds as of May 2024, two are value, two are growth and just one is mixed (for consistency, style here is as judged by the Morningstar style box).
If this is exanded to include Artemis UK Select and Chelverton UK Equity Growth, then value has a clear advantage.
This is despite the fact that, as we discovered recently, there has been a dearth of value fund launches in the past five years. Just one for every nine funds since 2019 is a value proposition, while growth and blended funds made up the lion’s share of new offerings.
So what of the rest of the UK equity sector in our database?
Well here, value's advantage is even more obvious.
It turns out value managers dominate the UK section of allocators’ portfolios, with value funds appearing 35 times in our database, split between 13 different mandates.
The most popular value funds may come as no surprise: heavyweights JOHCM UK Dynamic and Jupiter UK Special Situations are held by six allocators each. The pair are closely followed by Artemis UK Select.
Managers who adopt a mixed style comprise 21 total holdings across 11 different funds in our database. The most popular blended fund, held by six allocators, is Liontrust’s flagship Special Situations fund, run by veteran Anthony Cross.
Over in growth funds, there are only seven mandates held in our database and these are held a total of 19 times.
Lindsell Train UK Equity and Royal London Sustainable Leaders are held by seven and six allocators respectively, with no other UK growth fund even coming close to matching their dominance.
We think it’s interesting, then, that given how much of a battering value managers have been given over the past couple of years, they’re still the preferred style for our DFMs to employ when sussing out their UK equity allocations, though of course the composition of the UK market creates a broader canvas from which a value manager can work.
The underperformance of value, though, means that unless the tide turns, then the future of new funds in the UK universe appears to be firmly growth-based.
