Lazard UK Omega, Investec UK Alpha and JPM UK Equity Growth are funds that have seen assets under management (AUM) rise the most relative to their original size over the past five years, according to FE data.
The UK has been an unloved area of the market among international investors more recently, yet some funds in the IA UK All Companies sector have grown at an extraordinary rate.
For this study we looked at a fund’s AUM at the end of May 2013 compared with its figure at the end of May 2018.
Please note that both inflows from investors and performance uplift from underlying stocks performance will influence the AUM of a fund over time. Both factors need to therefore be accounted for when comparing the below data.
The rise of passive investing has been clear over the last five years, with index trackers representing four of the top five funds attracting the most amount of cash.
As the UK market has performed well, with the FTSE All Share returning 45.4 per cent over the last five years, some of the funds tracking the index have grown their AUM significantly.
Table of funds with largest change in AUM (£)
Source: Finxl
Already large in 2013, the Vanguard FTSE U.K. All Share Index fund has continued to gather assets, seeing the biggest rise in inflows over the past five years: AUM has swelled from just over £1bn to £7.5bn.
SSgA UK Equity Tracker and iShares UK Equity Index (UK), which also track the FTSE All Share, and Royal London FTSE 350 Tracker are the other three passive strategies among the top five funds gaining the most in AUM over the past five years.
The only actively-managed fund among the top-five is LF Lindsell Train UK Equity, which is overseen by FE Alpha Manager Nick Train.
Over the period, it has been a top quartile performer, returning 87.38 per cent. It has been remarkably consistent, sitting in the top quartile over one, three, five and 10 years.
The five FE Crown-rated fund is a low turnover, quality growth-focused portfolio that has seen its AUM grow from £691m to more than £5.3bn over the past five years.
Outside of the top-five, all-cap strategy Liontrust Special Situations sits in sixth position, having grown by £2.6bn to an AUM of £3.6bn from £996m five years ago.
FE Alpha Manager Richard Watts’ five FE Crown-rated Old Mutual UK Mid Cap is next up, having gained £2.5bn in AUM, with fellow Old Mutual manager Richard Buxton’s Old Mutual UK Alpha also found among the top-10.
However, while these funds have made the largest gains from a numeric standpoint, when looking at it as a percentage of their original AUM, the list is somewhat different.
Indeed, the fund that has seen the biggest gain relative to its starting size is the Lazard UK Omega fund run by Alan Custis and Lloyd Whitworth.
It has grown at an impressive 14,574 per cent over the past five years with its AUM up from £1.3m to £196m.
It has been a top quartile performer over 10 years, returning 161.73 per cent, as the above chart shows, and has delivered above average returns over one- and five-year periods.
Performance of fund vs sector and benchmark over 10yrs
Source: FE Analytics
Making its second appearance in the tables, Investec UK Alpha (which was ninth in the first table) is the second fund on this list.
The fund has grown its AUM from £47.6m in 2013 to £2.1bn at the end of May 2018, an increase of 4,436 per cent.
The fund is run by Simon Brazier, who took over from Jonathan Parker in 2015. At the start of the five-year period examined however it was run by Philip Rodrigs.
Over the full period, and despite the manager changes, the fund has produced a top-quartile return of 69.48 per cent.
JPM UK Equity Growth is third on the list and the only other fund to see its AUM grow by more than 4,000 per cent (4,424 per cent to be precise).
The five FE Crown-rated fund, which has seen its AUM rise from £5.7m to £256m, is managed by Ben Stapley and Kyle Williams with a quantitatively-driven and systematic process.
They rank UK stocks according to positive price and earnings growth and business strength criteria with only the top 30 per cent making it into the portfolio.
All stocks are equally-weighted, with exposure to any single industry limited to 10 per cent. Turnover can reach 200 per cent with the number of holdings moving between 100 and 120 stocks.
Table of funds with largest change in AUM (%)
Source: Finxl
Franklin UK Managers' Focus – another strong performer over the period up 80.2 per cent – is next. The fund has been a top-quartile performer over one, five and 10 years.
It is run by a five-strong team that includes FE Alpha Managers Paul Spencer and Ben Russon, with four market-cap specialist managers choosing around 10 stocks each although it must be a unanimous decision from the team to gain inclusion.
Others of note include the Unicorn UK Growth, which remains a relatively small fund at £65m despite seeing its AUM rise by 1,029 per cent over the past five years.
AXA Framlington UK Mid Cap and L&G UK Special Situations Trust also crack the top-10 with a 1,215 per cent and 1,032 per cent rise respectively.