Less than 9% of FE fundinfo Alpha Managers across the entire Investment Association open-ended universe are in the top-quartile of their sector year-to-date, according to data from FE Analytics.
So far 2022 has proven a difficult period for even the most senior asset managers, with inflation, higher interest rates and the war in Ukraine moving markets in the first four months of the year.
Against this backdrop, both equity markets and bond markets have been highly volatile, with major bond and equity indices down double-digits year-to-date.
Below, Trustnet singled out the funds run by Alpha Managers to see how they are performing amidst this volatility. Alpha Manager rankings assess the performance of a fund manager over their entire career, including previous funds they have managed. To gain an Alpha Manager rating, managers are ranked according to their track records since 2000, with extra emphasis applied to those with longer track records.
It is designed to distinguish the top 10% of fund managers who have consistently performed well over the longer term, based on three components: risk-adjusted alpha; consistency of outperformance versus their benchmark; and outperformance in both up and down markets.
Managers that have been active for more than two decades would have navigated major bear market events such as the dotcom bubble bursting in 2000, the Global Financial Crisis of 2007 and the Covid-19 market crash of 2020.
Out of the 336 funds that are run by Alpha Managers, just 29 have managed to deliver returns in the top quartile of their sector year-to-date.
Source: FE Analytics
The recent volatility has been particularly hard on the Alpha Managers running growth-orientated funds – which have suffered the deepest corrections year-to-date.
There are 38 funds which were down 20% or more so far in 2022. The 20 worst performing funds are shown in the table below.
Source: FE Analytics
The Fidelity Emerging Europe Middle East and Africa fund was the worst hit strategy year-to-date, down 41.3%. However, the fund closed to new investors in late March after the Russian invasion of Ukraine caused a crash in Russian assets.
Elsewhere in the list above, five Baillie Gifford funds were amongst those worst affected by the ongoing sell-off in high growth stocks.
Baillie Gifford American, Baillie Gifford Long Term Global Growth Investment, Baillie Gifford European, Baillie Gifford China and Baillie Gifford Global Discovery are all down 25% or more year-to-date.
Despite being hit so hard by the recent sell-off, all five of these funds remain top quartile of their respective sectors over a five-year period.
Similarly, despite being down 23.4% and 26.1% respectively, Comgest Growth Europe Smaller Companies and FSSA Japan Focus are both still top-quartile of their respective sectors over five years.
While most funds are down year-to-date in absolute terms, LF Ruffer Total Return and LF Ruffer Equity & General are up 3.9% and 2.9% respectively.
Amidst the volatility thus far in 2022, both funds’ focus on the risk of losing money in absolute terms rather than relative risk of underperformance has been beneficial to their relative performance.
These two strategies have done well on the back of the firm’s early calls on higher than expected inflation. Both have large positions in index-linked bonds which have profited from the recent high CPI (consumer price index) figures in developed markets.
LF Ruffer Total Return has performance in the top quartile year-to-date and over a five-year period, whereas LF Ruffer Equity & General is top-quartile year-to-date, but second quartile over five years.
Another top-ranked performer amongst the IA Flexible Investment sector was the Trojan fund, run by Alpha Manager Sebastian Lyon.
Like the previous two funds, it also places capital preservation at the heart of its investment approach, which has resulted in a 0.5% loss year-to-date.
It has also benefitted from its 47% exposure to index-linked bonds. Its 12% allocation to gold and gold-related investments have also boosted its relative performance given the rise in gold prices seen in the year.
When it comes to global equity managers, Lindsell Train Global Equity featured as a top-quartile performer year-to-date, despite being down 4.7%.
Alpha Manager Nick Train has experienced relative underperformance over the past few years but on a relative basis his global equity strategy is starting to show some resilience.
The GQG Global Equity however stands out as a top performer within the IA Global sector. This strategy, headed up by Alpha Manager Rajiv Jain, has benefitted from its overweight allocation to energy stocks year-to-date.
Exxon Mobil and Occidental Petroleum, both within the fund’s top 10 holdings, have performed strongly thus far in 2022 on the back of rising oil prices. Although the fund is top quartile returns this year, it is also top-quartile over a five-year period.