Investors deem Vanguard best value while Baillie Gifford falls out of favour

Brands with ‘singular focus on asset management’ like Fundsmith and Lindsell Train more vulnerable to shifts in sentiment

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Vanguard’s dominance in the UK market looks set to continue, with investors dubbing it the best provider of value in the fourth quarter of 2021.

The figures, courtesy of the latest Boring Money Fund Investor Tracker, revealed a dip in customer sentiment toward high profile ‘growth’ fund houses, like Baillie Gifford, and a growing preference for asset managers with an ESG focus.

But it was Vanguard that ultimately came out on top in terms of offering good value, based on rankings provided by 1,500 advised and non-advised retail investors.

The $7.5trn passives house has maintained the top spot for the past 12 months on a rolling basis, followed by HSBC Global Asset Management and Axa Investment Managers.

Rounding out the top five were Hargreaves Lansdown’s funds arm and Aviva Investors.

Brands beyond ‘pure play asset management’ consistently score higher

Boring Money CEO Holly Mackay (pictured) said the research indicates brands with a “proposition beyond pure asset management”, such as platform and advisory services, are more likely to consistently achieve positive scores.

St James’s Place, which was a new addition to the rankings, came in at number 10 over the quarter.

By contrast, those with a “singular focus on asset management” like Baillie Gifford, Fundsmith and Lindsell Train are more susceptible to fluctuations in customer sentiment based on market moves.

This was true of Baillie Gifford, which climbed into the top 10 in 2021 only to depart in Q4 as its preferred growth style fell out of favour.

The Edinburgh manager’s Scottish Mortgage trust, arguably its most high-profile fund, has seen 14% wiped from its share price so far this year, leaving it trading at a rare discount.

See also: Baillie Gifford takes retail sales crown for 2021 despite return of value

“Less confident investors are more likely to choose funds from larger brands – they are consequently more consistent in feedback and arguably less demanding,” Mackay said.

“Those managers with more confident investors – typically older men – will be held to tougher standards and be judged on performance over shorter timeframes.”

Mackay added that ESG is becoming a growing factor of whether firms are delivering value. BMO Gam and Royal London Asset Management ranked first and second when ranking value as delivered through an ESG lens. However, the former was not in the top 10 firms for value overall over the year.

Source: Boring Money

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