The top 10 best-performing active fund firms

Research ranks fund firms by how consistent their equity fund range has been over a five-year period.

Morgan Stanley has delivered the highest outperformance among its equity fund range, according to FundCalibre’s 2022 Fund Management Equity Index.

The index, now in its eighth year, looks at all actively managed equity funds recognised by the Investment Association (IA) and compares them with their sector averages over a five-year period. It then calculates the group's average fund performance. Fund groups must have a minimum of four qualifying funds to be included in the index.

• Funds Fan: market rotation, unloved UK, and fund yielding 5% plus 
• Fund and trust ideas to income-boost portfolios to beat inflation 

Baillie Gifford, which topped the index in 2021, slipped into second place, narrowly missing out on the top spot. The 17 equity Baillie Gifford funds produced an average sector outperformance of 44.47% over the five-year period (to 31 December 2021). However, the seven equity funds managed by Morgan Stanley delivered an average outperformance of 44.63%. Morgan Stanley has taken the top spot on four occasions. 

• Invest with ii: Top Investment Funds | Index Tracker Funds | FTSE Tracker Funds

FSSA Investment Managers, specialists in the Asia-Pacific and emerging market equity regions, came third in the rankings. In fourth and fifth place respectively were Marlborough and Brown Advisory.

The fund groups making up the rest of the top 10 are Liontrust, Matthews Asia, T. Rowe Price, Nordea, and Allianz.

The 2022 edition of the index covered 71 fund firms. The bottom five fund firms are Robecco, Waverton, Legal & General, M&G, and AXA Rosenberg.

• Bargain Hunter: out-of-form Baillie Gifford trusts slip to discounts  
• Baillie Gifford retains crown as active investors’ favourite fund firm

One outcome that cannot be guaranteed when investors hand over their cash to an active fund is future outperformance over a comparable stock market index. Some active funds do deliver the goods, but others fail.

Darius McDermott, managing director of FundCalibre, said its research shows “quite clearly that good active management is not a myth or simply good luck – it is very much based on skill”.

McDermott added: “Baillie Gifford and T. Rowe Price, for example, have both been in the top 10 for each of the eight surveys we have compiled [for] the report, spanning a time period of more than a decade. That shows consistently excellent stock-picking skills and value added for investors.”

He says that while growth-focused fund firms continue to dominate the top 10, the gap between growth and value strategies is starting to narrow.

“While Morgan Stanley and Baillie Gifford continue to sit at the top of the charts, their overall outperformance has fallen considerably from a year ago after a difficult 2021. 

“Houses with large ‘value’ teams continue to struggle. M&G, Schroder and Invesco, for example, find themselves in the bottom half of the table. However, there are some signs that we might be reaching a turning point as interest rates start to rise. Despite the five-year underperformance, all three of these groups delivered a small outperformance in 2021 - possibly a good sign for the future.”

Top 10: FundCalibre’s Fund Management Equity Index 

Source: FundCalibre