– UK Smaller Companies & Asia Pacific excluding Japan sectors dominate
– Fund manager longevity is a key themeÂ
As the stock market rally continues, it’s worth remembering that consistency of performance is important and investors need to bear this in mind when looking at funds’ past performance. Research from the Association of Investment Companies (AIC) highlights the twenty most consistent and strongly performing members of the last decade. See below for a full list.
UK Smaller Companies and Asia Pacific
It is companies from the UK Smaller Companies sector, closely followed by Asia Pacific excluding Japan, which are dominating the league table as the most consistent and strongest performers of the last decade. Seven out of twenty (over a third) of investment companies were from the UK Smaller Companies investment company sector, whilst five out of twenty (a quarter) were from the Asia Pacific excluding Japan sector.
Fund manager longevity
The figures also suggest fund manager longevity may also play a role in delivering strong, consistent performance. During the last ten years, over half of the investment companies (60%, 12 by number) have had the same manager at the helm for at least a decade, with a number of other companies having the same manager for close to a decade. Harry Nimmo, for example, has managed Standard Life UK Smaller Companies for over 9 years, Bruce Stout has also managed Murray International for 9 years, and Peter Ewins has managed F&C Global Smaller Companies for the last 8 years.
Strongest and most consistent performers
Scottish Oriental Smaller Companies, managed by Susie Rippingall for over a decade until her retirement on 1 April this year, now managed by Wee-Li Hee, Scott McNab and Angus Tulloch, is the strongest and most consistent AIC member investment company of the last decade. Over the last decade, a Â£100 lump sum investment into the company has grown to Â£875 and it has outperformed the average investment company in nine of the last ten years.
The second top performing and most consistent investment company of the last decade is from the Global Growth sector, and is F&C Global Smaller Companies, managed by Peter Ewins. A Â£100 lump sum in the fund over the last decade has grown to Â£654, and the company has outperformed the average investment company in nine of the last ten years.
Aberdeen New Dawn is the third most consistent, strongly performing investment company of the last decade, also outperforming the average investment company over nine of the last ten years. The company has been managed by Hugh Young since 1989 and a number of other managers are also managing the company (see the table on page three).
Interestingly, of the twenty most consistent and strongly performing investment companies, nearly a third (6) are managed by Aberdeen Asset Managers.
The AIC looked at the discrete annual returns every year for ten years across the investment company sector. Each year the company’s performance was benchmarked against the overall average performance of the investment company industry and the companies that most consistently outperformed on an annual basis were identified. Where two companies had the same consistency score, the volatility of the returns (standard deviation) was used to differentiate between them.
Annabel Brodie-Smith, Communications Director, Association of Investment Companies (AIC) said: “With markets back in ‘risk on’ mode, it’s worth pausing and remembering that consistency of performance can be more meaningful to investors than a one off ‘shoot the lights out’ success. Of course portfolio composition, charges, and a whole host of other factors also need to be taken into account. It’s interesting to see that the Asia Pacific and UK Smaller Companies sectors have managed to combine consistency with spectacular gains. Perhaps it’s not surprising that some of these Asia Pacific funds also have a smaller companies focus.”
Peter Ewins, Manager, F&C Global Smaller Companies said: “The fundamental attraction of our mandate is the huge scope that exists to identify good companies from around the world with the ability to deliver strong growth. Assessing which companies have the right management in place to deliver on their potential is key. Given liquidity issues it is important to take a long term view on investments in this area, and to focus on companies with the ability to generate positive internal cash-flow to allow them to develop successfully in the future”.
Most consistent, strong performing investment companies over last decade (Click image to enlarge).