Premier multi-asset manager Simon Evan-Cook has highlighted the “remarkably bad” performance of the IMA North America sector in an “autopsy” of its funds.
In his State of the Universe report, Evan-Cook argues the JPM US Dynamic fund exemplifies many of the problems seen in the sector.
The fund run by Dennis Ruhl, Pavel Vaynshtok and Jason Alonzo has underperformed its benchmark in sterling terms over one, three and five years and since inception in September 2007.
Furthermore, its assets under management have dropped from a peak of £3.9bn in May 2007 to just £96.5m today – a decline of 97.5 per cent. To Evan-Cook, this demonstrates how few investors benefited from the fund’s early good run and how many bought in just before it “collapsed”.
“This experience is not unique to this fund; there are carbon copies of this life cycle repeated across the sector, albeit on a smaller scale,” the manager says.
Evan-Cook says the main problem stems from US fund managers tending to embrace either growth or value styles without much balance between the two approaches. One of these styles will work and attract assets, until the market turns and heavy underperformance is seen.
As well as the JPM fund, the research highlights the BlackRock US Basic Value, UBS US Equity and Investec American funds as suffering the same problem. The Legg Mason US Equity fund, formerly managed by Bill Miller, handed some of the greatest underformance to UK investors, having never delivered a three-year period of beating the market.
“The story for US-based fund holders is a familiar one: a fund does exceptionally well while small, but by the time most investors have cottoned onto it, its track record deteriorates,” Evan-Cook says.