Bonds Advice

Five star fund managers you can put your faith (and money) in


Star fund managers have had a rough time over the past 18 months. Once-lauded investors such as Neil Woodford and Mark Barnett are no longer running money for investors after years of poor performance, while M&G’s Tom Dobell, who at one time ran one of Britain’s largest funds, is stepping down from his Recovery portfolio at the end of the year following a review by the company.

But there are still high-profile managers who investors can trust to look after their cash. Here Telegraph Money seeks to identify some of the best.

Terry Smith – Fundsmith Equity

One of the most recognisable and successful fund managers, Terry Smith founded his own investment company, Fundsmith, in 2010.

Mr Smith, who has been compared to Warren Buffett, the American investor, has an exceptional record. Since its launch a decade ago his £22bn fund has returned more than twice as much as a global stock market tracker and three times more than its rivals.

Mr Smith aims to pick a small number of companies that can consistently grow their earnings regardless of market conditions. Charles Younes of FE Investments, a research firm, said: “These companies have a history of both protecting investors when markets fall and rising quickly in fluctuating markets.”

Nick Train – Lindsell Train UK Equity

Cut from similar cloth to Mr Smith, Mr Train runs the £6.2bn Lindsell Train UK Equity fund, a top performer for investors who want to own British stocks. Since its launch in 2006 the fund has made more than four times more than its average rival and the London market.

Mr Train buys companies with strong brands that attract returning customers, allowing consistent growth in earnings. While the approach is similar to Mr Smith’s, they own only a few companies in common.

Importantly, in view of where many think Mr Woodford went wrong, neither manager has strayed from his investment process. While they have gone through a purple patch over the past decade, and things could change in future, investors can be confident that they will not change their style.

Anthony Cross and Julian Fosh – Liontrust Special Situations

Anthony Cross has run this £5.5bn fund for British stocks since its launch in 2005; Julian Fosh joined in 2008. They pick firms with enduring advantages such as high barriers to entry and superior supply chains that allow them to make higher profits.

Over the past decade the fund has made investors triple the returns of the average peer and wider London market. As the fund has grown, it has owned fewer small companies.

Rob Morgan of Charles Stanley Direct, an investment shop, said: “They have had to adapt to the fund size but I do not see them departing from their approach, which has been successful.”

Henry Dixon – Man GLG Undervalued Assets

While the managers we have mentioned so far have performed very strongly over the past decade, Mr Dixon’s £1bn fund has done less well. It invests in “value” stocks, which he buys when cheap in the hope they can rebound.

The past decade has been a challenge for value fund managers but Mr Dixon has done better than many. Since its launch in 2013 the fund has slightly underperformed both the London market and its peers but Adrian Lowcock of Willis Owen, a fund shop, said the fund had been beating the FTSE 100 index by a “significant margin” until the pandemic began.

Richard Woolnough – M&G Corporate Bond

Investing in bonds can be challenging, but Mr Woolnough has done a good job for investors over the past decade with his £3.5bn fund. Mr Younes said the portfolio had beaten its average rival through “effective bond selection”.

The fund has tended to make calls about the markets in addition to individual bond analysis. Mr Woolnough was one of the first fund managers to reinvest in the banks following the collapse in 2008 and has continued to invest in tobacco companies. “He has taken a lot of risk more recently, which has paid off,” Mr Younes said.

John Pattullo and Jenna Barnard – Janus Henderson Strategic Bond

Another bond fund with an excellent long-term record, this £3.1bn “strategic” – or unconstrained – portfolio has beaten its rivals over one, three, five and 10 years.

Paul Angell of Square Mile, a fund ratings firm, said the managers had proven themselves over a long period and had been through many different types of market.

The fund aims to provide investors with a high total return, combining capital growth with income, and invests across the range from “junk bonds” to government bonds. The fund has performed well so far this year as it was defensively positioned going into the Covid-induced sell-off in March.


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