Value funds overtake growth in FE Fundinfo Crown rebalance

Value funds are within the top 10% of all IA portfolios on alpha, volatility and performance, overtaking the previous growth winners

Driving on a beautiful spring day. Car overtakes another car on the road


Value funds pushed their way to the top in FE Fundinfo’s latest Crowns rebalance as the investment style’s outperformance overtakes growth portfolios.

To garner a five Crown rating, funds must be in the top 10% of portfolios on alpha, volatility and consistently strong performance.

Growth funds populated this top 10% of the IA universe historically, but a more hostile market environment has allowed value funds to thrive in recent years, according to Charles Younes, deputy chief investment officer at FE Investments.

“Resilience has emerged as a key driver of financial markets in 2023,” he said. “Value and cyclical managers tend to excel in such an environment because their portfolios are often composed of companies that thrive during periods of economic expansion.”

In the latest rebalance, 19 funds were awarded five Crowns, with those in the IA Sterling Strategic Bond sector being the biggest winners. Over a quarter (28.6%) of the 77 funds in the sector now have the highest rating.

See also: Will healthcare overtake AI as the top investment theme in 2024?

Younes said: “In continuously challenging conditions for fixed income markets, active bond managers have shown their capacity to protect from downside by decreasing their interest rate sensitivity.”

Following shortly behind was the IA Japan sector, which has 15 of its 65 funds (23.1%) boasting a 5 Crown rating. Two new funds investing in Japanese equities were awarded the top score after making significant returns since the last rebalance six months ago, during which time the sector is up 21%.

As value funds shouldered their way to the top, many growth funds had their five Crown ratings removed in January’s rebalance.

All six of the top rated Carvetian Capital funds lost their titles in the latest rebalance, meaning the firm no longer has any five Crown portfolios.

Similarly, Quilter Investors lost three of its top rated funds and Abrdn had two deratings, leaving them with 10 and two full Crown portfolios respectively.

See also: Abrdn confirms 500 redundancies in cost-cutting ‘transformation plan’ amid £12.4bn outflows


Latest Stories