The most consistent funds of the 21st century
A look at six funds, which have outperformed in 14 or more of the past 20 calendar years.
It’s hard to believe its almost 2020. As someone who remembers the turn of the Millennium, the date frankly makes me feel a little old.
Back in those days Labour were in power, Manchester United and Arsenal were good football teams, and everyone was worried about the Millennium bug causing a computer meltdown.
It’s been a roller-coaster ride for investment markets in the past two decades. On 31 December 1999, the FTSE 100 stood at almost 7,000 having been buoyed by the technology bubble.
That bubble was quick to burst, with stock markets plunging almost 50% in the next two and a half years. Since then we’ve had two bear markets (when markets fall for a sustained period) and two bull markets (when markets rise for a sustained period) the latter of which is now more than a decade old.
But that’s only half the story. We’ve seen a global financial crisis, a eurozone crisis, the rise of China and other emerging markets and the dramatic decision by the UK to leave the EU.
As mentioned, the FTSE 100 closed just shy of 7,000 on 31 December 1999 – fast forward 20 years and at the time of writing it is just over 7,200. That’s a capital return of just 4.1%.
Thankfully there are two things that could have made it a more profitable couple of decades for investors: dividends and active management.
If a passive investor in a FTSE 100 tracker had reinvested dividends, they would have received a much healthier return of 116.3%, for example. Tracker funds continue to rise in prominence and now account for one sixth (17.3%) of the total assets invested by UK retail investors, this compares to only 6% a decade earlier.
However, if an investor had put their money in some of the best actively managed funds of the past 20 years, their returns could have been even greater.
Here are six of FundCalibre’s Elite Rated funds which have outperformed their sector peer groups in 14 or more of the past 20 calendar years – that’s at least 70% of the time. They have all be run by the same manager over the two decades – managers who have proven their skill to investors over the long-term.
Royal London Corporate Bond fund – £1,000 investment is now worth £2,848.02
Managed by Jonathan Platt, the Royal London Corporate Bond fund has outperformed in seventeen of the past 20 years (85% of the time). Jonathan has proved adept at delving into parts of the fixed income market where others fear to tread and identifying bonds that offer superior risk-adjusted returns. The process is risk aware and concentrates on avoiding losers rather than picking big winners.
Jupiter Merlin Growth fund – £1,000 investment is now worth £4,199.22
This fund is run by one of the most well-regarded, multi-asset teams in the UK. The investment process is simple: the team assesses the macroeconomic environment, identifies the best people, constructs the portfolio, then monitors and modifies. Their leading investments are typically with managers who are resilient in tough times. It has outperformed in 80% of the past 20 calendar years.
EdenTree Amity UK – £1,000 investment is now worth £3,359.18
This fund makes social responsibility key to any investment decision. Managed by Sue Round, it differs from many of its peers as it invests in a large proportion of smaller and medium-sized companies. Sue finds companies that are currently undervalued and out-of-favour, but with the potential to increase in value. The fund has outperformed in 14 of the past 20 years.
Rathbone Income – £1,000 investment is now worth £4,797.52
This is a solid core equity income fund run by an extremely experienced and long-standing manager in Carl Stick. The fund typically invests in 40-50 holdings and has an underlying yield of 4.41%. The investment process uses ten core stock selection principles and revolves around three areas: risk management, quality and value. This fund has also outperformed in 14 of the past 20 years.
Liontrust UK Smaller Companies – £1,000 investment is now worth £7,537.83
This fund has been a stellar performer since its launch in 1998. The fund uses Anthony Cross and Julian Fosh’s Economic Advantage process. Each holding in the portfolio should exhibit one or more difficult to replicate traits. These traits are intellectual capital, strong distribution channels and/or significant recurring business. The fund has outperformed in 14 of the past 20 years.
Marlborough Special Situations – £1,000 investment is now worth £12,083.44
Giles Hargreave has been at the helm of this small-cap fund since 1998. This fund is highly diversified with some 200 stocks to minimise risk; these are mostly chosen on a company specific basis. Relatively small positions are initially taken with the managers building on the winners by adding as they grow. As the fund has evolved it has begun to invest in medium-sized companies. It has outperformed in 14 of the past 20 years.
Darius McDermott is managing director of FundCalibre