Fund Managers - the mythical sirens of the asset management industry lure in vast amounts of money and admiration with their perceived intellect and skills. As of April 2016, records show that managers in the UK are responsible for an impressive £928 billion held in investment products (stats from the Investment Association’s website). With some star managers managing over £800million in a single fund, it is safe to say that a handful of individuals hold the prosperity of many of the UK’s investors in their hands and often their judgments decide if money invested doubles in value or vanishes overnight.
To give credit where credit is due, the asset management industry comes together every year to celebrate the exceptional talent at the annual Investment Week Fund Manager of the Year Awards in London. Ahead of the event on the 7th of July, we look at how FE Analytics+ can help Advisers research and select fund managers to add value to their client propositions.
Making an initial shortlist
Within the Investment Association universe alone there are close to 5,000 fund managers making it a daunting task to sift through profiles to look for desired quality and hidden gems. FE’s featured list of 184 ‘’Alpha Managers’’ offers a good place to start the qualification process. (N.B. exact number of Alpha Managers changes annually).
In an industry that is full of fund ratings, the FE Alpha Manager Rating uniquely evaluates an individual manager’s track record, consistency, stock picking skills and ability to generate performance and is agnostic of the funds they’ve managed or asset management brands they’ve worked for. By definition the ‘’FE Alpha Manager Ratings rate the performance of a fund manager over their career including all funds they have managed and places worked.’’ The ratings are designed to distinguish fund managers who have consistently performed well over the longer term by a robust calculation methodology that is comprised of two key components: the risk adjusted alpha/Sortino (with track length bias) and consistent outperformance of a benchmark overall.
Click here for full methodology >>
This list can then be further filtered based on a sector choice. Let’s say for instance you were looking to bolster your client’s portfolio with some absolute return funds. Using the dynamic selection tools on FE Analytics you can create an initial fund panel from the IA’s Targeted Absolute Return sector that are managed by Alpha Managers.
Comparisons
With a smaller selection of 14 fund managers to choose from, you can now conduct more granular research by:
- Individually reviewing each manager’s profile via comprehensive factsheets that are fully exportable and print ready.
- Conduct bespoke comparisons between fund managers and also between manager and the peer group composite.
The first chart shows the return on £1000 invested in Barry Norris and Steve Russell five years ago would have returned £1,443 and £1,243 respectively. The second chart plots the returns in excess that Barry Norris has generated compared to his peer group… talk about an absolute return!
Qualitative Commentary
Although the numbers do the talking as seen above, having a qualitative overlay of information in the form of manager interviews, insight and news can help you understand the manager’s outlook and nuances that numbers don’t convey. FE’s free to use news and research website FE Trustnet provides instant access to analysis and thought leadership on funds, managers and ratings. The email bulletins and dedicated Fundswire alert service can keep you stay up-to-date on managers that you have an eye on, helping you stay agile with your investment selections.
Client communications
Star managers such as Richard Buxton and Neil Woodford are household names and investors are curious to know more about how their money is being managed. It doesn’t help that the national press often sensationalise the profession altogether with negative narratives on fees and hidden cost. (A recent guardian article was headlined ‘They charge huge fees, but are fund managers really working for you?).
Further, given the current political instability and the regulator’s calls for transparency, FE Analytics can help Advisers create bespoke client reports and ongoing governance documentation to satisfy the curiosity of even the most persistent clients.
For more information contact us at enquiries@financialexpress.net or 0207 534 7667
Stay tuned on the blog for a full list of winners from the Investment Week Fund Manager of the Year Awards next week.