Elevated volatility in markets has resulted in a dramatic shakeup of FE’s league table of asset managers that have the highest number of five crown rated funds with Baillie Gifford and JP Morgan Asset Management dropping out completely.
In the research provider’s latest rebalance, which occurs biannually, 336 funds were awarded the top ranking of 5 FE Crowns, 16 of which were newcomers that have only qualified for a ranking after accumulating a three year-track record.
Baillie Gifford and JPMAM, which shared second and third with Quilter Investors and Royal London Asset Management respectively in the previous rebalance in July, were not among the top 20 crop of asset managers six months later.
Rathbones, which was in fourth place after the July rebalance, had also fallen out of the top 20 by the start of the year.
FE senior fund analyst Tanvi Kandlur (pictured) said funds like Baillie Gifford’s which have a bent toward growthy tech companies were particularly vulnerable over the six month period.
“Most of the funds downgraded have a strong growth tilt and are concentrated in nature which did very well in 2017.
“However, in 2018 some European managers saw several stocks sell off significantly post earnings misses, which hit the concentrated funds hardest.”
FE’s leader board looked wildly different from the last rebalance in July. Only two asset managers – Schroders and Royal London Asset Management – were able to maintain their positions in the top five.
While Schroders shared the top spot with Blackrock in July, with each fund group boasting 11 funds with a 5 FE Crown rating, six months later Schroders was the clear frontrunner with 16 funds snagging the top accolade.
Blackrock meanwhile fell to sixth place on the list with nine funds receiving FE’s highest ranking, putting it on a level pegging with Aberdeen Standard Investments, Fidelity International and Gam.
Architas and Pimco disrupt the pecking order
Instead the top of FE’s leader board was dominated by new blood, with Architas and Pimco disturbing the previous pecking order, claiming second and third place respectively.
Architas saw 13 of its funds receive a five-crown ranking, double the number of top ranking funds it had in July. It was followed closely by Pimco which had 12 five-crown funds.
This is the first time that either fund group has appeared in the top five.
“Considering that neither Architas nor Pimco has appeared in the top five groups before, to achieve a top three place is outstanding,” said Charles Younes research manager at FE. “Most of Pimco’s fixed income funds have seen upgrades at this rebalance reflecting the strong performance across the range. Architas’ leap up the table can be explained by the dominance of multi asset, volatility managed funds in their range and this strategy worked well in a volatile year like 2018.”
New entrants
Sixteen previously unranked funds were given a five-crown rating straight out of the gate, the latest FE rebalance showed.
Among the generously awarded newbies were two of Legal & General Investment Management’s Multi-Index funds, First State Asia Focus fund, the Neptune Global Technology fund and the Royal London Global Bond Opportunities fund.
American passives giant Vanguard seven vehicles from its target retirement range that received FE’s highest accolade after being previously unrated.
The Baillie Gifford Global Stewardship also received the top ranking.
“These funds are multi asset and volatility managed which, like Architas’ range, have done very well in a volatile market,” Kandlur explained.
Previously unrated funds receiving 5 FE Crowns are listed below:
