Baillie Gifford is investors’ favourite active fund house of 2020, attracting record inflows throughout the year.
The latest Pridham report showed that passive provider Blackrock remained the most popular asset manager, with £6.3bn of net inflows in 2020, but that active, growth-focussed Baillie Gifford was hot on its heels with inflows reaching £5.2bn.
Outside of growth assets’ unrivalled performance in 2020, investors were also drawn to fund houses with strong environmental, social and governance capabilities.
The popularity of ESG funds boosted business at Royal London and Liontrust, both appearing in the top 10 with £3.4bn and £2.6bn of inflows respectively. Rathbones has also been a beneficiary of this trend thanks to its Ethical Bond fund.
|Top 10 managers by net sales in 2020 (£m)|
Helen Pridham, editor of the report, said: “The exceptional performance of Baillie Gifford’s funds last year helped it to attract increased business across the piste from discretionary managers, advisers and direct investors.”
Martin Bamford, head of client education at Informed Choice, agreed, saying it was clear that active fund management which set itself apart had the potential to attract significant inflows.
Baillie Gifford’s quality growth investment strategy has performed remarkably well over the past few years, particularly against the backdrop of the coronavirus due to its strong technology bias.
It's American fund is the absolute best performer in the IA North American sector over a six month-, one year-, three year- and five year-period, returning 112 per cent over the past year compared to the sector's 13 per cent.
And the fund house's outperformance is not limited to the US. Its UK Equity Alpha fund has returned 30 per cent over the past five years compared to the sector's 3 per cent, while the Baillie Gifford Pacific fund is the absolute best performer in its Asia sector over one year, three years and five years.
Baillie Gifford also manages the largest investment trust in the AIC universe — Scottish Mortgage — which has returned 121 per cent in share price terms over the past year.
Ben Yearsley, director at Fairview Investing, said: “The performance Baillie Gifford has had over the last few years was bound to generate strong sales figures.
“It is also interesting to see the lack of some of the perceived ‘big beasts’, such as Jupiter and M&G.”
For Darius McDermott, the two standouts were Liontrust and Rathbones, saying both were “really strong investment houses” which were much smaller than the other eight in the top 10.
He added that once passives were removed from the list, the major themes prevalent were growth managers and ESG.
Mr Bamford said: “The trend towards ESG investing will undoubtedly drive fund sales in the future.
“Index tracker funds, despite their growing popularity to date, are unable to compete effectively in the ESG space and could start losing ground unless fund managers find a way to effectively leverage their shareholder voting rights to introduce positive change.”