FE fundinfo's five-crown rating awarded to 14 new funds

The ratings, which are awarded as a result of quant-based analysis, were given largely to funds managed by boutique asset management firms and smaller groups, including the likes of Brown Advisory, Gresham House Asset Management, AMP Capital and Axiom Investors.

Funds that achieved a five-crown rating for the first time included the Luxembourg-domiciled Capital Group US Corporate Bond fund, CFP SDL Free Spirit, TwentyFour Asset Backed Opportunities and Brown Advisory US Sustainable Growth.

In total, 360 funds in the Investment Association (IA) universe achieved five crowns, with 19 managing to move from a one-crown rating to five since the last rebalance in January this year.

At the opposite end of the spectrum, 230 funds lost their five-crown ratings - particularly those that invest predominantly in property or the retail sector.

Charles Younes, research manager at FE Investments, said many funds also lost their ratings due to the fact they "misjudged their timings" when it came to the sell-off in March.

"One example of this is Man GLG's Strategic Bond fund, which unfortunately has been one of the worst-performers in its sector," he said. "Not only did it perform badly in the second half of March, but it also failed to capitalise on the upside in April.

"Manager Craig Veysey held his hands up and admitted that he got the timings of adjusting the fund's allocations wrong and this has been reflected in its new one-crown rating."

Following the latest rebalance, 12 fund management houses now have at least eight five-crown rated vehicles under their belt.

Liontrust Asset Management boasts 13, while T. Rowe Price and Aberdeen Standard each have 11. BlackRock has ten, while Morgan Stanley, Sarasin, Baillie Gifford, Fidelity International and Valu-Trac all have nine. Architas, Jupiter and AXA all have eight, although the firm with the highest percentage of their products achieving the top rating is Morgan Stanley at 56.3%.

In terms of sectors, IA UK Index-Linked Gilts and North American Smaller Companies fared best, with 37.5% and 31.3% of their vehicles achieving five-crown ratings respectively. IA Europe ex UK is also worthy of an honourable mention at 23.9% followed by IA North America at 18.6%.

Oliver Clarke-Williams, portfolio manager at FE Investments, said the recent performance of some sectors is "perhaps counterintuitive to what we might expect given the difficult markets".

"Index-linked gilts, which have the highest percentage of five-crown rated funds, are traditionally seen as a very difficult asset class for managers to differentiate themselves in and provide outperformance as their investment universe is so small," he explained.

"Gilts did very well during the Covid-19 sell-off and the ratings suggest that some managers had the foresight to see what was coming and reposition the duration positions of their funds to benefit accordingly."

FE crown ratings are calculated using an alpha-based test, a volatility score and a consistency score relative the fund's benchmark.

Funds that reside in the top 10% for their scores are awarded five-crown ratings, while those in the next 15% are awarded a four-crown rating. To score just one crown, funds must find themselves in the bottom 25%, while the next tier of 25% deems them as two-crown rated.

• Tweet  
• Facebook  
• LinkedIn  
• Send to  

• Topics
• Investment
• Investment Association
• Capital Group US Corporate Bond
• Gresham House Asset Management
• Brown Advisory
• FE Investments
• Charles Younes
• BlackRock
• Aberdeen Standard
• T. Rowe Price
• Craig Veysey
• Fidelity International
• Baillie Gifford
• Sarasin
• Morgan Stanley
• Jupiter
• Axa
• Fund ratings
• fund performance