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Super six: The latest portfolios to join FundCalibre’s Elite Rating list

Cherry Reynard
Written By:
Cherry Reynard

Ratings agency FundCalibre has added six funds to its Elite Rating list after its inaugural investment committee meeting earlier this month.

The portfolios – two absolute return funds, two multi-asset funds, and two emerging market equity funds – have been added after passing the quantitative and qualitative screen processes provided by the firms behind the FundCalibre joint venture: Chelsea Financial Services and Albemarle Street Partners.

First, the portfolios are assessed by Albemarle’s AlphaQuest screening tool, which seeks to identify funds with a greater than 60% chance of producing outperformance as a result of manager skill. Then, the ratings agency’s investment committee conducts face-to-face manager meetings and peer group research.

“We continue to search for managers who are able to generate alpha after fees. We do not expect to add a significant number of funds at each quarterly meeting, but the latest additions are all run by highly impressive managers,” Chelsea’s Darius McDermott said.

Listed below are the funds which have been added to FundCalibre’s original list of just over 100 Elite Rated funds. Three funds – Schroder UK Opportunities, Threadneedle UK, and Henderson European Growth – have been removed from the list after managers Julie Dean, Simon Brazier, and Richard Pease announced they are to leave their respective firms.

1 Invesco Perpetual Hong Kong & China
Run by Mike Shiao since June 2012, the fund achieves Elite status by virtue of the manager’s longer track record on an offshore version of the portfolio. The SICAV is also able to invest in Taiwanese stocks, but FundCalibre analysis shows that Shiao generates alpha from all three regional buckets.

The investment committee also likes the depth of the Invesco team in Hong Kong, and notes the majority of the analysts have experience on the sell-side.

2 Hermes Asia ex-Japan
Another Asia Pacific-focused fund, Hermes Asia ex-Japan is similar to the Invesco product in that manager Jonathan Pines has run the portfolio since launch in December 2012.

However, FundCalibre was able to run the group’s identical segregated mandate through its AlphaQuest quantitative screen, and the portfolio scored “extremely highly” on this metric.

3 Old Mutual Global Equity Absolute Return
The Old Mutual Global Investors fund, run by Ian Heslop and team, has produced strong absolute performance in recent years, a sign of its ability to generate genuine alpha, according to FundCalibre.

However, its typical net long position, and tendency to take directional risk, makes small performance dips during periods of volatility more likely.

4 Smith & Williamson Enterprise
Another absolute return fund, the Enterprise portfolio is run by Rupert Fleming and Mark Boucher and targets a return of 8 per cent to 10 per cent per annum irrespective of market conditions.

The Smith & Williamson fund has held up during recent market volatility, producing a positive return during the September to October drawdown period.

5 F&C Multi-Manager Navigator Distribution
The most familiar fund on the list, Gary Potter and Rob Burdett’s flagship £1bn multi-manager portfolio scores highly for its consistent outperformance and reliable yield.

McDermott also pointed to the strength of Potter and Burdett’s team – at nine-strong, one of the largest in the multi-manager arena – and their habit of identifying lesser known funds for inclusion in their portfolio.

6 Rathbone Strategic Growth
The first risk-targeted fund on the Elite list, David Coombs’ portfolio sits in the IMA Unclassified Sector but the FundCalibre investment committee has assessed it according to its benchmark of LIBOR plus 3 per cent, and the Mixed Investment 20%-60% shares sector, which the investment committee sees as a natural peer group. The portfolio scored highly on both these counts.