The duo, who manage the Schroder Income fund, were also the biggest fallers in Sanlam UK’s biannual Income Study released last month.
The Alpha Managers annual list recognises the top 10% of UK retail-facing managers, based on their performance throughout their entire careers.
Among the managers to have lost their status this time around are Odey Asset Management’s Crispin Odey, whose fund has been suffering recently, and Ben Leyland of Jo Hambro Capital Management, as well as GAM’s Paul McNamara and Stephen Bailey of Liontrust.
Charles Younes, research manager at FE, commented: “Managers with a value bias have fared badly this time around – highlighted by managers who favour this style such as Kevin Murphy and Nick Kirrage of Schroders Asset and Martin Walker of Invesco Perpetual dropping out.
“FE Alpha Manager ratings take a career view, suggesting that even over the long-term, value investing has not offered managers huge scope to outperform.”
Meanwhile, Fidelity climbed to the top of the group leader board with 10 FE Alpha managers making the list, followed by Schroders, BlackRock, GAM, Jupiter Asset Management and Polar Capital, all in second place with six managers each.
Younes added: “There is no single factor determining success at a group level. Fidelity’s Asia Pacific equities and emerging markets coverage gives them an edge over groups that don’t have managers in these areas whilst BlackRock’s strength here is largely down to their expertise in traditional asset classes.
“Meanwhile, three of Polar Capital’s six FE Alpha Managers take a thematic approach by working on specific sectors, proving that managers working this way can also add value.”
New entrants
The 2018 list has seen the emergence of 43 managers, 32 of which have never been previously awarded this rating. Michael Lindsell, who runs the Lindsell Train Japanese Equity fund and is co-manager of the Global Equity fund, was awarded the status for the first time.
Craig Bonthron of Kames Capital, Shawn Driscoll of T.Rowe Price, Ben Fitchew of Ardevora, Paul Flood of Newton and BNY Mellon and James Govan of Barings Asset Management were among the names given the status.
Rob Gleeson, head of FE research, said: “The purpose of the FE Alpha Manager rating is to take a step back and remove short-term market movements or cyclical factors from the analysis. It allows us to identify those managers who can add value over the very long term – which is fundamental considering the market conditions we have been facing over the past few years.”
Smaller companies’ managers shine
For the second year running, the IA UK Smaller Companies sector boasts the biggest percentage of FE Alpha Managers with a third of managers achieving the title (33%), closely followed by Asia Pacific inc Japan (29%) and European Smaller Companies (28%).
However, at the opposite end of the scale, only 4% of Global Equity Income Managers achieved FE Alpha Manager status and no UK Gilts or Index Linked Gilts Managers met the grade.
Gleeson added: “Smaller companies, emerging markets and Europe have been a more reliable hunting ground for alpha managers. These markets have been suffering from either structural inefficiencies or uncertain political situations, which adds a lot of noise.
“This provides opportunity for careful analysis to add value. Bond markets have not offered much in the way of opportunity to outperform for a while as yields and spreads have remained tight, this is reflected with few bond managers making the grade for Alpha Manager status.”
FE said it will announce its Hall of Fame Managers, which are those who have been awarded an FE Alpha Manager Rating for seven consecutive years, and the nominees for the FE Alpha Manager awards, in May ahead of the ceremony.
