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Big names on FE alpha list fall victim to 2016’s rotation

Big names on FE alpha list fall victim to 2016’s rotation
Henderson’s John Bennett has dropped off FE’s list of alpha managers

The market rotations of 2016 have seen high-profile investors such as Henderson European equities director John Bennett and Axa Investment Managers’ Nigel Thomas fall off FE’s annual alpha managers list.

In the 2017 rebalance of its rankings, which identify the top 10 per cent of UK retail-facing managers based on factors including outperformance, FE noted a “considerable shake-up” had taken place.

“There has been a big churn of talent with the emergence of 58 new alpha managers and a cull of 38 managers who previously held the highly coveted status,” said the data provider.

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The names to depart included Mr Thomas, who runs the £3.8bn Axa Framlington UK Select Opportunities fund, as well as Mr Bennett and Edouard Carmignac.

Others such as Nick Price, whose Fidelity Emerging Markets vehicle suffered a “painful” 2016 because of its growth tilt, have also fallen off the list. 

Of the 193 managers awarded alpha status, 40 appeared on the list for the first time, with new entrants including Odey’s James Hanbury, Polar Capital Global Insurance manager Nick Martin and Colm McDonagh, head of emerging market fixed income for Insight.

Small-cap managers stood out, with 34 per cent of IA UK Smaller Companies funds run by alpha-ranked individuals.

By comparison, 20 per cent of managers in the IA UK Equity Income sector made the list, compared with 19 per cent of IA UK All Companies managers.

Mika-John Southworth, director at FE, said: “In the immediate aftermath of Brexit, many UK small- and mid-cap managers took a hit to performance, but in the UK Smaller Companies sector in particular, investors who held their nerve have been rewarded with a swift recovery.

“More than half of this year’s top-20 ranked FE alpha managers are running UK small-cap or UK All Companies funds. Indeed, on average, IA UK Smaller Companies managers have returned 40 per cent more than the FTSE All-Share over five years.”

On a group level, Schroders and Fidelity topped the leader board, with 10 and nine alpha-rated managers, respectively.

Jupiter and JO Hambro also fared well, with seven managers each. However Henderson, which did well last year, saw its number of alpha managers halve from 10 to five.

As part of its analysis, FE looked at manager track records going back to 2000, with extra weighting given to those who have run funds for an extended period of time.

Managers were assessed on factors including the ability to create risk-adjusted alpha and outperformance in both rising and falling markets.

Firms with managers on FE's alpha list

Asset managerNumber of 2017 alpha managers
Schroders10
Fidelity9
JO Hambro7
Jupiter7
Allianz Global Investors6
BlackRock6
MFS5
Invesco5
Henderson5
GAM5
First State5
Source: FE