Baillie Gifford came out on top as the bestselling fund group in the UK last year with net sales of £3.1bn, according to the Pridham Report, but the Scottish asset manager could struggle for a repeat performance in 2019 if sentiment shifts away from growth.
The asset manager’s products, particularly the American fund, went “bonkers” riding the tech wave in H1 2018, but the global market sell-off that began in October knocked many funds from the top to the bottom of the performance league tables with Scottish Mortgage among the worst-performing investment trusts during the period. The US equities team holds
Elsewhere in the report, Liontrust, Miton and Man GLG made it into the net sales top 10 in 2018 for the first time.
Helen Pridham, editor of the Pridham Report, said: “The achievements of established groups such as Fidelity, Schroders, Jupiter, Invesco and M&G in maintaining their strong gross sales flows should not be underestimated but as mature businesses they also have to deal with high levels of natural outflows, even at the best of times.”
Pridham added until Brexit is sorted fund investors are likely to remain cautious. “Fund groups face a challenging start to 2019 but this could lead to an uptick in sales later in the year if and when the Brexit situation becomes clearer.”
Baillie Gifford, LGIM and Artemis managed the double achievement of being in the top 10 for gross and net retail fund sales for 2018.
It said Baillie Gifford has thrived in recent years thanks to its emphasis on active investment management, with its American and Japanese funds among its best sellers, while LGIM has benefitted from its sales of passive funds, though sales of its actively managed funds have also been increasing.
The fund house was also the Readers’ Choice award in the PA Fund Awards, which took place in January.
Artemis saw steady net flows into a range of its funds last year, including Artemis Monthly Distribution to Artemis US Absolute Return.
Baillie Gifford growth bias
Baillie Gifford could struggle to repeat investment and sales performance from the last few years if markets turn cautious and investors seek more defensive products, Willis Owen head of personal investing Adrian Lowcock said. Although Lowcock wasn’t ready to write off the growth style just yet. “It tends to perform well late cycle and the tech theme isn’t going to disappear anytime soon. What we have seen is a tempering of expectations.”
Ryan Hughes, head of active portfolios at AJ Bell, pointed out a strong pricing approach meant many of Baillie Gifford’s strategies were some of the cheapest in their sectors, which worked in its favour.
Jason Hollands, managing director at Tilney added that Baillie Gifford are clear about their approach. “The market environment however is evolving as concerns bubble away about whether or not the earnings cycle has peaked and how much longer the US economic expansion can continue. We may therefore start to see investors recalibrate their interest towards stocks with conservative balance sheets and well covered dividend yields and moderate enthusiasm for those with growth and momentum characteristics.”
