A focus on using their own particular investment approach has allowed several boutiques – including Ruffer, Slater Investments and TwentyFour – to see most of their funds rise to top of their peer groups during the recent market rotation. 
Since several effective Covid-19 vaccine were announced in early November, markets have been given another leg-up as investors started to eye a future without locked-down economies.
However, this has prompted a rotation in markets. Growth stocks, which had outperformed in the low growth and low inflation environment, started to fall behind while unloved value stocks, which tend to do better in period of strong economic growth, surged.
In a recent article, Trustnet looked at the larger fund houses (or those with 10 or more funds) that had the highest proportion of their range in the top quartile of their respective sector over this market rotation.
We found that Artemis Fund Managers had the best record, with 12 of its 19 eligible funds (or 63.2 per cent of its range) generating first-quartile returns since 9 November. Mirabaud, Invesco, Barings and Schroders also came out well in the research.
Here, we turn out attention to the smaller fund groups out there (those with nine funds or fewer in an Investment Association sector where a quartile ranking is appropriate) to discover which of those are dominating during the market rotation.
Source: FE Analytics. Based on funds’ quartile rankings being 9 Nov 2020 and 30 Apr 2021
The table above shows all the fund groups with two-thirds or more of their eligible funds in the first quartile over the period in question. There’s 22, out of a total of 119.
Five of the groups on the list only had one fund included in the research, meaning they would have a result of either 100 per cent or 0 per cent of their range in the top quartile. Those groups are Aberforth Unit Trust Managers, Brook Asset Management, Havelock London, Oldfield Partners and R C Brown Investment Management.
Some well-known boutiques with more than one fund can be found on the list.
Odey recently rebranded some of its funds under its Brook Asset Management new subsidiary business.
All four of Slater Investments’ funds - Slater Growth, Slater Recovery, Slater Income and Slater Artorius – are top quartile in the UK equity sectors. The team, headed by Mark Slater, is known for building concentrated portfolios of UK stocks, while taking a ‘growth at a reasonable price’ approach.
“Our core investment process is biased in favour of growth, though we do not subscribe to the view that ‘growth’ automatically means expensive and ‘value’ is by definition cheap and hopeless,” it said.
RWC Partners has a number of strategies that focus on the value style, which has helped them capitalise on the market rotation away from growth stocks. Five of its six eligible funds are top quartile over the period under consideration, including RWC Global Emerging Markets, RWC Global Convertibles and RWC Global Horizon.
TwentyFour Asset Management, which is a boutique of the Swiss based Vontobel Group, has a strong reputation in the fixed income space. The firm only invests in this asset class, saying: “This fixed income specialist focus means that all our resources and people are managing one asset class with no distractions.”
Three of its four eligible funds are in their peer group’s top quartile since Vaccine Monday: TwentyFour Dynamic Bond, TwentyFour Corporate Bond and TwentyFour Asset Backed Opportunities.
Two of Ruffer’s three eligible funds are also first quartile since early November: LF Ruffer Total Return and LF Ruffer Equity & General.
Ruffer's approach is unchanged from when the firm started in 1994 and centres around twin aims of not losing money over any 12-month period and growing the value of its clients’ assets over the long term. To do this, Ruffer’s portfolios are always split between growth assets (typically equities) and protection assets (or a combination of conventional and index–linked bonds, currencies, commodities and derivatives).
The firm is renowned for this cautious approach, stating: “Our pre-occupation is with not losing money, rather than charging headlong for growth. It’s by putting safety first that we have made good money for our clients.”
Source: FE Analytics. Based on funds’ quartile rankings being 9 Nov 2020 and 30 Apr 2021
In contrast, there are 15 small fund groups with all of their funds in the bottom quartile since the market rotation started, shown in the table above.
Given that this rotation has involved investors pulling out of growth stocks and moving towards value, it should be no surprise that several of the groups found above have made their name as growth investors.
The likes of Fundsmith, Lindsell Train, Seilern Investment Management and Blue Whale Capital have built strong track records on the back of their growth-focused approaches, but have found themselves slide down the rankings over more recent time frames as these dropped out of favour.