James Anderson and Nick Train leave Warren Buffett in the dust over the last 20 years

James Anderson, Nick Train and Michael Lindsell and Alexander Darwall are among the UK fund managers who have beaten Warren Buffett in the last 20 years, according to analysis by AJ Bell.

Buffett, one of the world’s most revered investors, has returned 2,810,526% in dollar terms to Berkshire Hathaway investors since 1965, outstripping S&P 500 returns of 23,454%.

Over the last 20 years, Berkshire Hathaway has still been going strong, returning 507.5% to UK investors in pounds and pence, compared to 353.1% from the S&P 500.

But after crunching the numbers AJ Bell found found that 160 sterling denominated funds in the Investment Association and Association of Investment Companies universes had posted higher returns than Buffett over the last 20 years.

Out of this crop of over-achievers only four have had the same manager at the helm throughout the entire period and “can therefore be said to have gone head to head with Buffett,” AJ Bell reasoned.

Scottish Mortgage returns four times higher than Berkshire Hathaway’s

At the top of the table is Anderson’s Scottish Mortgage trust. Anderson, who has managed the £9.2bn trust since 2000, has returned 1,928.1% over the last two decades, nearly quadruple Buffett’s gains since April 2001.

Not far behind is duo Nick Train and Michael Lindsell, with their eponymous Lindsell Train Investment Trust returning a whopping 1,620.7%. Train’s Finsbury Growth & Income trust also features in the top five funds to best Berkshire Hathaway, having returned 700% over the period.

Darwall and Max Ward round out the top four managers, with the former’s European Opportunities trust delivering gains of 787.3% and the latter’s Independent Investment Trust returning 641.8%. Like Train, Darwall also has the privilege of appearing in the top 10 twice with his Jupiter European fund, which he managed until leaving to set up his own boutique in 2019, returning 689.2%.

Top ten comparable large cap funds which have beaten Buffet

Source: AJ Bell, FE, Thomson Reuters Eikon, total return in GBP 20^th April 2001 to 20^th April 2021

Anderson, Train and Darwall have benefited from growth rally

AJ Bell financial analyst Laith Khalaf said that the performance of these managers whose focus lies outside the US, unlike Buffet, is all the more impressive given the S&P 500 has been the best performing major index of the last two decades.

While these managers have beaten Buffet, they manage far less money than Berkshire Hathaway which has a market cap in excess of $600bn, giving them much more flexibility to invest in more modestly sized companies and to exit positions more swiftly, Khalaf said.

Anderson, Lindsell Train and Darwall are also well known growth investors which has given them the advantage over Buffet’s out of favour value approach.

But Khalaf notes that all four managers bear similarities to Buffet as high conviction investors with a buy and hold approach and a focus on the competitive advantages of the companies they are investing in.

AJ Bell financial analyst Laith Khalaf said: “Anderson, Lindsell Train, Ward and Darwall definitely sit in the skilful category, having bettered the world’s best investor over the last two decades”.

“None can claim to be better than Buffett just yet, who’s still investing at 90, but a dazzling 20-year track record is, at least, a good start,” he added.

Emerging markets and small cap funds give Buffett a run for his money

Of the 160 Oeics and trust that have outperformed Berkshire Hathaway, 62 invest in emerging markets, 57 invest in small and midcaps, and 18 have specialist mandates such as sector specific funds.

However Khalaf said it was not fair to directly compare these strategies to Berkshire Hathaway as riskier, niche investment areas are generally expected to perform better over the long term.

Only 24 funds that beat Berkshire Hathaway were developed market large cap equity funds.

Despite Buffet’s celebrity status, Khalaf highlighted that 2020 was “not a vintage year” for Buffett, with Berkshire Hathaway returning 2.4%, compared to 18.4% from the US stock market.

Table 1. Top ten funds which have beaten Buffet

Source: AJ Bell, FE, Thomson Reuters Eikon, total return in GBP 20^th April 2001 to 20^th April 2021