Baillie Gifford has finally claimed the top spot in FundCalibre’s seventh annual Fund Management Equity Index, pushing three-times winner Morgan Stanley into second place, says Darius McDermott, managing director of FundCalibre.
The survey, which identifies the groups with the most consistent track record of outperformance in equity investing over five years*, has been won by Morgan Stanley for the past three years, but Baillie Gifford’s exceptional performance in 2020 has elevated it into first place. This has been helped in no small part by Baillie Gifford American, which was the best performing fund of the year, returning 121.84%, that’s 105.67% more than its average peer. A further four Baillie Gifford funds outperformed their sector average by 50% or more.
Newcomers into the top ten of the Index, having made huge improvements in performance, were recently re-named FSSA, Matthews Asia, JP Morgan, Legg Mason Martin Currie and the newly combined group Premier Miton. A lot of their outperformance came from the continued dominance of growth styles and having been invested in COVID winners rather than COVID losers.
2020 was an unprecedented year for mankind and a turbulent one for investors. Having started January in the longest ever bull market, with world equity markets posting new highs in many cases, we then experienced the fastest bear market in history as the impact of the global pandemic hit home. Since then many stock markets have recovered – leading many to question if we are in the early stages of a new cycle or in a bubble that is about to burst.
Agility, flexibility and good stock picking skills were key in the 12 months of 2020 and research from Quilter found that active equity managers outperformed market indices in seven of the ten major Investment Association equity sectors.
FundCalibre’s research goes one step further, demonstrating that 2020 wasn’t just a lucky year for active management, or indeed Baillie Gifford whose performance in 2020 has raised questions as to whether it can be repeated. While the level of outperformance may drop, it is still highly likely the outperformance will remain. Over five years the average outperformance of Baillie Gifford’s equity funds is almost 10% more than the second placed company and almost 50% more than the firm in third.
Baillie Gifford also has the cheapest charges of any of the companies in the survey. Charges matter as they compound over time. So having a lower charge really helps performance as well as demonstrating a really good attitude of putting the client first.
Baillie Gifford and T. Rowe Price are the most consistent companies over the long term. Both have been in the top ten for each of the seven surveys we have conducted, spanning a time period of more than a decade. That shows consistently excellent stock-picking skills and value added for investors.”
Top ten fund groups 2021
Key findings
1. Two companies shine over more than a decade
Two companies; Baillie Gifford and T. Rowe Price, have been among the top ten companies in each of the seven annual surveys conducted by FundCalibre. In first and fourth place respectively this year, both have continued to improve on their positions and have equity teams that have – quite spectacularly – outperformed for the past 11 years. Both are also larger groups with 16 qualifying funds each. Maintaining such a level of consistency across that many products is extremely impressive.
2. Five of the top ten remain in place
Five of last year’s top 10 also feature again this year. Importantly, these five are a mixture of both large and small management houses, indicating success can be found across different business models. Whether it is a boutique fund house or a global asset manager, if the process and team are right for the fund, it can outperform.
3. Five groups surge into the top 10
The recently renamed FSSA was a new entry straight in at number 5 now that it has enough funds to qualify for the survey. Having moved up 26 places last year, Legg Mason Martin Currie continued its phenomenal rise, rising from 25th place to 10th. Matthews Asia rose 28 places to number 7 and JP Morgan rose 30 places to number 8. And having merged its two businesses in November 2019, Premier Miton made its first appearance in the top of the table at number 9.
4. Charges matter
Baillie Gifford also wins on charges. It has the cheapest average ongoing charge of all the companies – even across its most popular funds. Some are even cheaper than passive funds. Charges matter as they compound over time. So having a lower charge really helps performance as well as demonstrating a really good attitude of putting the client first. This can run right through the culture of the firm into the stock picking and shows in the performance numbers.
5. Fund research is crucial
The index also highlights that there is a huge difference in performance between the best and worst groups. The average outperformance of top group, Baillie Gifford’s funds, was almost 100%* higher than that of the bottom group, Sanlam. So good fund research is key to maximising the potential of your investment portfolio.
More information, including previous survey results and methodology can be found here.
About the index
FundCalibre’s Fund Management Equity Index 2021 looks at most actively-managed equity funds recognised by the Investment Association, and available on platforms for retail clients. It then compares them with their sector averages over a five-year time frame*.
Each fund group’s funds are then collected together to calculate the group’s average fund performance. Fund groups must have a minimum of four qualifying funds to be included in the index.
*Data for the Fund Management Index 2021 is sourced from FE fundinfo, using cumulative statistics % change bid to bid, net income reinvested, over five years to 31/12/2020.
These are purely statistical charts. While every effort has been made to ensure the accuracy of this information, FundCalibre takes no responsibility for any errors, omissions or inaccuracies therein. Some decisions taken in the production of the index are subjective and are based on FundCalibre’s own opinion. Past performance is not a reliable indicator of future returns. Please note the Fund Management Equity Index does not constitute investment advice. If you are in any doubt as to the suitability of any investment you should seek professional advice. An appearance of any fund in this index is not an indication it should be bought, sold or switched. For more information, view the full methodology.
