Fund manager league table: top 20 investors who beat the market

Marina Gerner
16 November 2016
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New research from Tilney Bestinvest has drawn up a list of the top equity fund managers that have over their careers managed to add value through delivering a mix of outperformance and consistency.

A number of these managers - specifically Neil Woodford, Nick Train, Giles Hargreaves and David Gait manage funds that are members of the Moneywise First 50 Funds list.

The research looked at the track record of almost 500 fund manager across a range of equity sectors, where a minimum of five years of data was available.

Respected investor Neil Woodford took the top spot. He is followed by Royal London's Martin Cholwill. The Liontrust duo Anthony Cross and Julian Fosh were placed in third. European equity veteran Richard Pease of Crux took fourth place, followed by Unicorn's Chris Hutchinson.

 

Career outperformance

Jason Hollands, managing director of Tilney Bestinvest, says: "If you are going to invest with actively managed funds it is vital to select the right managers and to always reassess the case for continuing to hold a fund when the manager or team changes as they inevitably do in a highly competitive industry.

"The dilemma for investors is that fund performance data is typically provided for a period of just five years, which is barely an economic cycle and in any case such data may be of very limited relevance if it relates to the tenure of a manager who is no longer at the helm.

"We therefore believe it is vital to assess the relevant, full career track record of the current manager in a sector which may span multiple employers."

Tilney Bestinvest has developed its own database of fund manager career track records. Managers are scored on a number of factors, including their average monthly excess performance over their market benchmark over the course of their full career history.

Tilney Bestinvest also took into account how the fund manager has fared over the past five years.

In doing so, this twin performance filter was applied to recognise managers who have both performed well across their career and in recent times, as some fund managers can start out well but their performance can deteriorate as, for instance, their funds become too big or they take on other responsibilities. Others burn out and lose their hunger for success, says Hollands.

Consistency also important

Consistency is also an important attribute as it helps to distinguish between managers whose long-term records may have been favourably distorted by a 'lucky' streak and those who have "genuine skill".

Managers were, therefore, also ranked on the percentage of individual months that they have delivered performance ahead of their benchmark during their career.

Tilney Bestinvest stripped out the impact of costs so that each manager's record was comparable on a like-for-like basis. Where a manager has run multiple funds within the same sector at the same time, a blended track record across the funds was used.

Hollands adds: "While analysing a manager's historic track record is important, choosing a fund based solely on past performance is as inadvisable as driving a car staring into the rear view mirror alone.

"In considering a manager's future prospects there are other factors to consider, such as whether they are running too much money and if capacity could impact their investment style as well as an assessment of whether the fund they are now managing has an attractive structure and reasonable costs.

"We therefore see this type of past performance analysis as a useful starting point rather than a complete formula for picking a fund."

Click on the table below to enlarge:

This article was originally written for our sister magazine, Money Observer.

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