16 top class funds which saw their crown slip

Two sides of the same coin, one could argue, but much of conventional investment wisdom stems from protecting on the downside perhaps even more so than taking part in the upside.

So when FE released information of its latest crown ratings rebalancing, the fact its focus was predominantly on those funds that had improved their ratings was concerning.

“The FE crown fund ratings are quantitative ratings ranging from one to five designed to help investors identify funds which have displayed superior performance in terms of stock picking, consistency and risk control,” the company says.

The scores are rebalanced bi-annually and are compiled using three-year total returns, with three elements of the fund’s performance scrutinised – alpha generation, volatility and whether it has consistent above-benchmark performance.

Since July, when the crown ratings were last rebalanced, FE said 12 funds had climbed from being ranked one to four, while 14 funds had risen from two to five crowns. It added that five funds had achieved the biggest leap from one to five FE crowns. Find out more here.

Recognition for funds that have managed to dramatically turn around their performance is worthy indeed, but I would wage just as many advisers would be interested in learning the funds whose past six months did not pan out so well.

Just as there are funds that have soared from one crown to five, there are those that have seen a reversal in fortunes from five crowns to two, or four crowns to one.

So, who are they?

While not on the initial communication from FE, following cooperation from the company, Portfolio Adviser can exclusively reveal the funds which had a ropey six months to the end of December.

Of 16 funds, seven are fixed income mandates, with the Kames Strategic Bond Fund, run by Phil Milburn and the Artemis Strategic Bond Fund, run by James Foster and Alex Ralph, two of the bigger bond names on the list.

Meanwhile, on the equities side, Neil Veitch’s SVM UK Opportunities Fund is one of the best-known, and fund’s from Trojan, Baillie Gifford and Swip also feature.

Some will argue every manager is entitled to a bad six months, but a three-notch rating downgrade over this timeframe is a significant slip up.

It may not be reason enough to switch clients’ allocation or look around for the next best thing, but it certainly gives advisers extra information to consider, particularly given the onus FE puts on volatility and consistency as well as alpha generation. Feast your eyes below…

16 top class funds which saw their crowns slip