Top ranked funds Newcomers
Top 10 UK equity funds with less than a 3-year but at least a 1-year track record
1-year 1-year 1-year 1-year 1-year 1-year Launch Fund Dom
% chg Alpha Beta R² Sharpe volatility date size (£m)
PowerShares Dynamic UK Fund 63.12 0.05 1.25 0.92 5.5 0.13 3/12/07 2.61 Ireland
PowerShares FTSE RAFI UK 100 Fund 42.33 -0.1 1.19 0.97 5.09 0.11 3/12/07 3.72 Ireland
GMO UK Equity Value UT 42.07 N/A N/A N/A N/A N/A 24/10/07 N/S Ireland
db x-trackers FTSE 100 37.66 -0.03 1 1 4.22 0.12 5/6/07 187.37 Lux
Parworld Track UK C 36.59 -0.06 1.01 1 4.27 0.12 3/10/07 62.6 Lux
AllianceBern UK Style Blnd SAcc 33.87 -0.13 1.02 0.97 4.37 0.1 13/12/07 0.01 Lux
Collins Stewart UK Focus A 26.47 -0.03 0.71 0.94 3.11 0.12 1/2/08 1.48 Ireland
SEI GMF Quantitative UK Eq Instl £ N/A N/A N/A N/A N/A N/A 7/5/09 241.82 Ireland
AEGON intl Thread UK Eqty Inc A N/A N/A N/A N/A N/A N/A 7/8/09 N/S Ireland
AEGON intl M&G UK Select A N/A N/A N/A N/A N/A N/A 4/8/09 N/S Ireland
5 Jan ’09 – 5 Jan ’10. Bid to bid, $, gross income, no cap. Source: Morningstar
FUND SELECTOR’S
COMMENT PETER
TOOGOOD, INVESTMENT
SERVICES DIRECTOR,
OBSR
Among the newcomers,
three of the funds stand
out. Namely, these are the
GMO UK Equity Value
Fund, Aegon International
Threadneedle UK Equity
and Aegon International
M&G UK Select.
The GMO UK Equity
Value Fund is managed by
the privately-held, USbased
fund management
group GMO, founded in
1977 by Jeremy Grantham,
Richard Mayo and Eyk van
Otterloo.
GMO adopt a conservative
value-oriented
approach and their focus
has historically been on
the management of US
equity portfolios, investing
in both large and small cap
stocks.
GMO believe that markets
are ultimately driven
Top 3 newcomers vs index
60
45
30
% 15
0
-15
PowerShares
Dynamic UK Fund
PowerShares FTSE
RAFI UK 100 Fund
-30
Jan ’09 Mar May
Source: Morningstar
by rational valuation, but
that sentiment may cause
prices and value to be out
of alignment for considerable
periods. As a consequence
they believe that a
bending of value and
momentum disciplines
offer the best opportunity
to outperform consistently.
The investment process
is thus based on a quantitative
model which screens
the universe of the largest
1,000 stocks in the UK
market looking at a number
of value and momentum
stock selection strategies.
An in-house optimiser is
used to convert the model
portfolio into a final portfolio
that is consistent with
their models, takes into
account the fund objective
and the effect of liquidity
and transaction costs. The
fund is typically invested in
80-120 stocks.
Until recently, the Aegon
International Threadneedle
UK Equity Fund was managed
by Leigh Harrison,
FTSE AllSh TR £
Jul
GMO UK Equity
Value UT
Sep
Nov
Jan ’10
head of UK equities at
Threadneedle. Following
the announcement that
Simon Brazier is to join
Threadneedle from
Schroders as co-head of UK
equities with responsibility
for all UK Equity nonincome
products, the management
of the fund will be
handed over to him.
The fund offers investors
a well-diversified UK
equity portfolio, focused
on large-cap stocks and
constructed using both
top-down and bottom-up
inputs. Using the resource
of the UK equity team, the
manager seeks to identify
medium to long-term
investment themes within
the UK and global economies,
which may lead to
focused bets across any
one sector.
The Aegon International
M&G UK Select Fund is
temporarily being managed
by Garfield Kiff, who
assumed responsibility for
the fund, during a leave of
Top 6 newcomers – 1-year risk and return
Return (%)
80
70
60
50
40
30
Collins Stewart
UK Focus A
db x-trackers FTSE 100
Parworld Track UK C
PowerShares FTSE
RAFI UK 100 Fund
20
Sector average
AllianceBern UK Style Blnd SAcc
3
4
Standard deviation (%)
5 6
To 5 Jan ’10. Bid to bid, $, gross inc, no cap. Source: Morningstar
FUND SELECTOR UK EQUITIES
absence from the named
fund manager, Mike
Felton.
Whilst the investment
approach primarily focuses
on intensive bottom-up
research and stock-picking,
this is combined with
the incorporation of a topdown
perspective. The
fund is reasonably concentrated,
investing in 30 to 40
stocks with a 60:40 split
between core (strategic)
and satellite (tactical)
holdings.
The manager is currently
focused on companies
that he believes will emerge
structurally and competitively
stronger from the
downturn and is thus
biased towards some of
the more defensive areas,
such as tobacco, utilities
and aerospace & defence.
It is also worth noting
that neither the Threadneedle
nor M&G UK Select funds
are new strategies, but
rather that the wrapper via
Aegon is new.
PowerShares Dynamic UK Fund
“
GMO believe that
markets are
ultimately driven by
rational valuation, but
that sentiment may
cause prices and
value to be out of
alignment for
considerable
periods
”
FEBRUARY 2010 [www.international-adviser.com] INTERNATIONAL ADVISER
19
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