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Lesser lights outperform giants of the global funds sector

Lesser lights outperform giants of the global funds sector

Big name funds are being outperformed by some lesser known investments in the global sector, according to research by Fundscape.

The consultancy firm has highlighted a trio of funds that have outshone the bigger names in the world of global investments, the best selling sector of the past year.

The high-profile £12bn Fundsmith Equity fund is the most popular global equity fund of the year so far in sales terms, and has returned 15 per cent in 2017.

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But it is being beaten by two much less well known funds in the shape of Aubrey Capital’s £36m Global Conviction fund, which has returned over 35 per cent, and the £1.8bn Morgan Stanley Global Opportunities fund, which has returned 29 per cent.

Similarly the absolute best performing fund in the IA Global sector over the past five years, returning 165 per cent, compared with 78 per cent for the average fund in the sector, is the £292m Baillie Gifford Global Discovery fund.

Bella Caridade Ferrera, founder of Fundscape, said advisers appear to be happy to let global managers “do the heavy lifting” of asset allocation at a time of rising markets.

Ms Carridade Ferrera said: “Baillie Gifford Global Discovery is definitely worth a mention as a hidden gem.

"Appearing on only four lists, Doug Brodie’s essentially smaller companies fund holds less than £300m assets but has been a consistent outperformer relative to the S&P Global Small Cap Index, and sports an active share relative to its index of a whopping 99 per cent.

"The argument for longer-term exposure to smaller companies is well understood, and this fund could be a valuable enhancement of the global equity portion of investors’ portfolios.”

Laith Khalaf, senior analyst at Hargreaves Lansdown said fund managers following the style of Terry Smith, who runs Fundsmith, or Nick Train, who runs the £3.2bn Lindsell Train Global Equity fund, another big seller, “have done fantastically well in recent years, and there will come a point where the worm turns and the rest of the market catches up".

"However that could still be some considerable time away. For investors the key is to maintain a diversified portfolio, both in terms of stocks and regions, but also in terms of manager styles.”

David.Thorpe@ft.com