Baillie Gifford International is the most consistent IA Global fund of the decade, according to data from FE Analytics, beating its sector average in every single one of the past 10 calendar years.
Of the 169 funds with a track record long enough to be included in the study, another seven funds beat the sector in nine of the past 10 calendar years, while a further 16 managed it in eight.
Performance of funds vs sector
Source: FE Analytics
Baillie Gifford International is headed up by Charles Plowden, Malcolm MacColl and Spencer Adair.
The managers focus on companies that they believe will deliver above-average profit growth over a period of five years, saying that share prices tend to follow corporate earnings and cash-flows over this sort of timeframe. They draw on a combination of their own ideas and those from Baillie Gifford’s various investment teams to produce a portfolio that typically holds 60 to 80 stocks.
In a note to investors published in September, the managers said 2018’s uptick in volatility has had no impact on their process, and they remain focused on identifying and holding businesses with durable competitive advantages which are likely to support above-average earnings growth over the long term.
“As bottom-up stockpickers, we are encouraged by the steady flow of new ideas being discussed, from technology platforms to specialist lighting providers,” the managers added. “We believe global growth is plentiful and broad and we continue to strive to capture it.”
Data from FE Analytics shows Baillie Gifford International made 266.37 per cent over the 10 years in question compared with 178.66 per cent from the MSCI AC World index and 150.9 per cent from the IA Global sector.
It is £911.1m in size and has ongoing charges of 0.6 per cent.
Of the seven funds that beat the sector in nine of the past 10 years, three of these beat Baillie Gifford International’s total return over this time.
Performance of funds vs sector and index over 10yrs
Source: FE Analytics
Top of the tree is Janus Henderson Global Equity, with gains of 341.25 per cent. The fund, run by Ian Warmerdam and Ronan Kelleher, has a bias to businesses with strong franchises and competitive advantages. These companies typically operate in markets that the managers believe will offer sustainably high levels of growth.
In a recent note to investors, Warmerdam said that 2018 reminded investors how difficult it can be to predict macroeconomic and political events or prevailing market sentiment. As a result, he said he continues to focus his analysis on high-quality companies that are well placed to benefit from what he believes are more predictable societal and demographic trends.
“These trends are often underappreciated by the equity market,” he explained. “They include the transformational effect of the internet; the need for greater healthcare innovation given the ageing global demographic; the ongoing shift from cash usage towards paperless payments; the drive for greater energy efficiency across a wide range of industries; and the growth of the emerging market consumer.”
The £572.2m Janus Henderson Global Equity fund has ongoing charges of 0.85 per cent.
Next up is Rathbone Global Opportunities with gains of 312.06 per cent. FE Alpha Manager James Thomson aims to invest in under-the-radar and out of-favour growth companies, with a preference for mid-sized businesses in developed markets.
“We invest in unblemished, innovative, differentiated, scalable and sustainable growth companies that are shaking up their industries,” said the manager. “This growth-oriented investment style also takes a responsible approach to risk and embraces a sell discipline without emotion. We hold a defensive bucket of holdings that are less economically sensitive, with slower and steadier growth prospects, for risk management purposes.”
The £1.4bn fund has ongoing charges of 0.79 per cent.
Last up is Pictet Security with gains of 282.28 per cent over the 10-year period. The rationale behind the fund is that security permeates every corner of our lives, whether that is the surveillance cameras that monitor public transport, cyber-security that allows entire industries to operate online, electronic payment systems which are displacing cash – or even safeguarding the utilities that power our homes.
“The security industry is everywhere, strongly anchored in our daily life, and this has fuelled stellar growth over the last few years,” said a statement from the group.
“And what makes it an attractive investment is that three long-term drivers provide secular growth: innovation, urbanisation and regulation.”
In a recent article on FE Trustnet, Pictet was one of four funds that Skerritts Wealth Management’s Andrew Merricks said would allow investors to sleep at night.
“Pictet Security is a fund I like because it invests in things that we all need and which are needed around the world. The need for security actually rises the less certain the global geopolitical picture becomes, so it tends to be quite resilient in downturns,” Merricks explained.
The fund is headed up by Yves Kramer, Alexandre Mouthon and Rachele Beata. It is $4.1bn in size and has ongoing charges of 1.2 per cent.