A large slew of the best-regarded funds have soft-closed as well, meaning that managers such as Paul Marriage at Cazenove are likely to receive less attention in the future.
Rob Morgan, investment analyst at Charles Stanley Direct, says this means investors looking for funds to invest in now need to turn to those managers with less of an established track record.
“Some of the managers that were running small amounts of money such as Alex Wright or Philip Rodrigs have either closed the doors or aren’t running large amounts of money any more,” he said.
“Sometimes investors are going to have to cast the net further to find funds, which could mean accepting a shorter track record or fewer years of outperformance.”
We asked the experts to pick those managers who are relatively unknown or inexperienced who they think could be the stars of tomorrow.
George Godber and Georgina Hamilton at Miton
Morgan picks George Godber and Georgina Hamilton (pictured right), who run the CF Miton UK Value Opportunities fund together.
The managers used to work with Henry Dixon of the top-performing Matterley Undervalued Assets fund, a top-quartile performer in the IMA UK All Companies sector for four out of the last five years. GLG hired Dixon to manage a mirror version of the fund last November.
The £45m CF Miton UK Value Opportunities fund was launched in March of last year, and has outperformed in the early stages of its life.
Our data show it has made 21.49 per cent since launch while the FTSE All Share has made 10.27 per cent and the average All Companies fund 14.09 per cent.
Performance of fund vs sector and index since launch
Source: FE Analytics
Morgan says Godber and Hamilton use a very similar process to the one they employed at Matterley.
“It’s very much a value-driven process, trying to pick up good-quality companies at prices below their intrinsic value,” he said. “They are trying to spot the undervalued opportunities other investors have missed.”
“They have a pretty good record, albeit they have in the past been managing with Henry Dixon and could be ones to look out for in the future.”
Thomas Moore at Standard Life
Meera Hearnden, senior investment analyst at Hargreaves Lansdown, says that Thomas Moore, manager of the Standard Life UK Equity Income Unconstrained fund, is one to watch.
Moore (pictured) runs his £269m fund in a different way to many managers in the popular UK Equity Income sector, looking for companies with the best prospects of dividend growth rather than headline yield.
The result is a portfolio with a track record of consistent top-quartile performance and a bias towards the mid cap sector rather than the mega caps usually sought after by income-seekers.
This has served the manager well as that part of the market has surged in recent years, but also means the portfolio is more exposed when markets fall.
The fund has been in the top-10 performers in the 98-fund sector in years when the markets have risen and in the bottom 10 in 2011, the only year since he took charge that the market fell.
Over three years it is the seventh-best fund in the sector with returns of 53 per cent, compared with the sector average of 37.39 per cent.
Performance of fund vs sector and index over 3yrs
Source: FE Analytics
Investors do need to give up a certain amount of headline yield, however, for the growth: the fund is paying out 3.54 per cent, putting it in the third quartile for the sector.
“He has been doing a very good job,” Hearnden said. “The equity income space is really competitive and it’s really difficult to deliver over and above the talented managers. He is one of those up and coming managers who has produced good performance with a different approach to other funds in his peer group.”
“He has got quite a focused portfolio but it’s about the bets he makes: a lot of funds in the sector tend to be focused on the large pedestrian companies and biased towards defensive sectors.”
“He has been quite early in moving into more cyclical sectors and suffered some pain, but that bet has paid off in the last 18 months.”
Stephen Message
AFI panellist Darius McDermott of Chelsea Financial Services says that Stephen Message (pictured), who runs the Old Mutual UK Equity Income fund, is one manager who hasn’t received the attention he deserves.
McDermott says that the manager’s consistency makes him a strong candidate: like Moore, Message has significantly beaten the sector average in three of the last four calendar years, the exception being 2011.
Also like Moore, the manager runs a multi-cap portfolio, attempting to reduce the reliance on the mega caps that dominate the sector.
The current yield on the fund is 4.4 per cent, putting it ahead of Moore’s portfolio and well within the top quartile for the sector.
Chris St John at AXA IM
Bestinvest’s Jason Hollands picks FE Alpha Manager Chris St John (pictured), who runs the £58m AXA Framlington UK Mid Cap fund.
Although his portfolio has not attracted the inflows of some other mid cap funds, Hollands says the manager is a potential successor to Nigel Thomas on AXA Framlington UK Select Opportunities.
St John’s fund has significantly beaten its FTSE 250 benchmark since launch in March 2011, returning 74.9 per cent to the index’s 48.86 per cent, according to data from FE Analytics.
Performance of fund vs sector and index over 3yrs
Source: FE Analytics
“I previously worked with Chris at ISIS Asset Management, where he was in the small cap team and regarded as a rising star,” Hollands said.
“Since 2011 he has been managing the AXA Framlington UK Mid Cap fund, a relative minnow at £58m, but which has convincingly beaten the FTSE Mid 250 index.”
“Chris also works closely with veteran star manager Nigel Thomas and is deputy manager on the flagship AXA Framlington UK Select Opportunities fund. We don’t believe Nigel has any intention of hanging up his boots for some time, but Chris would be a potential successor when he does.”
