The Peter Hargreaves-backed Blue Whale Growth fund has been awarded the highest rating in FE Fundinfo’s latest quarterly rebalance, which also saw Baillie Gifford rocketing back up the charts.
The Blue Whale Growth fund, managed by Stephen Yiu (pictured), received a five-crown rating from the research and data analytics provider straight out of the gate, along with 15 other funds that were eligible for inclusion in the January rebalance for the first time.
FE Investments research manager Charles Younes said Blue Whale Growth was “definitely one to keep an eye on”, highlighting its similarities to Terry Smith’s £23bn Fundsmith Equity strategy.
“Stephen Yiu, along with his deputy Daniel Allcock, has adopted a similar successful approach to Terry Smith and performed admirably, returning more than 17% over the past year in very challenging conditions,” Younes said.
The fund, which has a bias toward US equities and tech stocks, has enjoyed explosive growth during the coronavirus crisis, with assets tripling from £200m at the start of 2020 to £691.9m as of 22 January 2021, according to Trustnet.
Yiu has outpaced his peers in the IA Global sector on a three-year view, returning 67.4% – double the sector average of 33.8%.
More recently, though, his fund has slipped to the fourth quartile on both a three and six-month view as positive news around the roll-out of the Covid vaccine has buoyed unloved value stocks.
See also: Blue Whale goes on hiring spree after growth fund triples in size
New entrants from BMO and Fundsmith receive top marks
BMO Global Asset Management was the fund house that saw the highest number of newly eligible funds promoted in the January rebalance, with its Universal MAP Cautious, Balanced and Growth vehicles all achieving the top rating.
Smith’s £430.5m Sustainable Equity fund, which celebrated its third birthday in November, was also among the new five-crown joiners, as was the £203.9m Baillie Gifford UK Equity Focus fund.
At the end of the January rebalance, FE Fundinfo said 379 funds had achieved a five-crown rating, including the Aberdeen Standard Sicav I Global Innovation Equity and NB Corporate Hybrid Bond funds, which jumped from the lowest one-crown rating.
Elsewhere 109 funds lost their five-crown ratings, many of which were traditional stockpickers with a bias toward financials and energy companies, FE Fundinfo noted.
Baillie Gifford edges back up the ranks
Baillie Gifford also made a splash in FE Fundinfo’s rankings, coming in second place for the fund group with the highest number of five-crown rated funds.
Fourteen of its 29 funds achieved the highest accolade, a notable jump from the July rebalance when only nine of its funds received top marks.
It was Liontrust that reigned supreme, however, topping FE Fundinfo’s list for the third time in a row with 17 five-crown funds in its stable. Despite this, its proportion of funds to claim the highest rating was lower than Baillie Gifford – at 25%.
Aberdeen Standard matched Baillie Gifford with 14 five-crown rated funds, followed by T Rowe Price and Fidelity International with 11 each.
ESG funds shine in latest rebalance
Overall, FE Fundinfo said fund houses with an ESG bent shone in the period under review. Nearly one-fifth of the ethical and sustainable funds that were eligible received the five-crown accolade.
The sector now accounts for 8.4% of all five-crown rated funds, despite the fact ethical and sustainable funds make up only some 5% of the 3,255 funds that were considered.
“There is no doubt that environmental, social and governance [ESG] investing has really taken off in the past year,” said FE Investments portfolio manager Oliver Clarke-Williams.
“While global lockdowns have had a huge impact on markets and traditional stocks have suffered, ESG funds have seen record inflows and increasing investor attention.
“We expect this trend to continue in 2021 with new regulations coming into play, meaning funds will have to be more transparent with their ESG disclosures. Fund groups will increasingly direct their efforts and resources into making their investments more sustainable in the long term.”
