PA ANALYSIS: Are talented new fund managers a flash in the pan?
From PA ANALYSIS Feb 6 2012 BY: Gary Corcoran
, Group Editor
, Portfolio Adviser and International Adviser
At last week’s Portfolio Adviser Fund Awards, the JPM US Equity Income Fund run by Clare Hart was named the Best Equity Newcomer. Will she go on to have a long and illustrious career?
The award was selected by a panel of 25 investment specialist wealth managers who were asked to give a forward-looking view of the funds in each category rather than rewarding funds that have done well in the past. I have read somewhere that past performance is no guide to future performance...
For the full list of award winners, click here.
The £462m fund has recently passed its three-year track record although, perhaps reflecting the difficulties of beating the S&P 500, she has only outperformed the index in one of those years, the 12 months to 31 January.
Esteemed company
Hart follows Jonathan Asante and Millar Mathieson, managers of the £161m First State Latin America Fund which was the 2011 winner of the Best Equity Newcomer at our annual fund awards. Launched in April 2009, it was top quartile for its first calendar full year, returning 33.1% against a sector average of 19.4% and 18.3% by the MSCI EM Latin America index.
Hart is the only one of the Best Newcomer winners to make positive returns in 2011, with Asante and Mathieson losing 9.3% in the calendar year though remaining top quartile.
The winner prior to Asante/Mathieson was the Henderson Horizon Pan European Alpha Fund, a long/short strategy run by Paul Casson from 1 July 2008. The fund itself was launched in December 2006.
Casson’s euro-denominated fund had a solid 2007 (9.65%) that was followed by a flat 2008 (-1.46%) before regaining positive territory with a return of 23.79%) in 2009. Since then, as with many European equity propositions, he has failed to rise to the same heights, with returns of 1.73 % and then -0.02% for 2010 and 2011 respectively.
One of the winning funds, the inaugural Best Equity Newcomer, Willem Venke’s JOHCM Continental Select Values Fund, closed in 2009 with the firm concentrating instead on its £367.5m European Select Values Fund.
Longer-term form
The most volatile of all the winners is Bryan Collings and Grant Shotter’s (Resoultion) Hexam Global Emerging Markets fund, the Best Equity Newcomer in 2008. Its returns have been 48.84%, -40.81%, 75.62% (the year after its win), 15.65% and -27.5% for each year from 2007 through to 2011 inclusive.
Whether it is coincidence or an anomaly shared by the majority of each year’s esteemed judging panel, the Best Equity Newcomer has been won by a geographically-based fund. Looking across the list of five winners, since 2007, there have been two European (2007 and 2009), one global emerging market (2008), one Latin America (2011) and Hart’s US fund this year. We changed the timing of the awards to the start rather than the end hence there was no 2010 awards ceremony.
As we ask the judges to look ahead when making their nominations for each category, each fund was rewarded for their potential rather than their historical performance so in pure performance terms, the judging panel has proven its worth.
Given the strength of the funds in each category, none of the Best Equity Newcomers winners have yet gone on to win a Portfolio Adviser Fund Award for their specific equity category - will Hart be the first?