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Popular demand

In markets such as today, funds of funds managers are leaning on experienced managers as the best able to produce returns, with older names accounting for well over half of their portfolios these days.

It was a similar move in the 2001/03 bear market but just because managers with longevity are relied upon in times of difficulty does not mean that they do not also suit bull market conditions.

In looking back 10 years to the bull market of 1999, there are a number of names and funds which were popular then and remain top fund choices today.

Looking back over the decade – outside of the technology sector – to see who was popular then and today, the market has to be split into two camps – fund managers and the funds themselves. Despite the industry’s tendency for managers to change jobs every few years or so, some funds have retained top performance and appeal through manager changes.

Like Jupiter income, which in 1999 was run by the well regarded William Littlewood. In 2000, it was taken over by Tony Nutt and the fund remains a top buy in the income space in 2009. Interestingly, Littlewood, who has not really managed retail money in the past decade, is coming back to the market with a multi-asset fund at Artemis.

Other funds that fall into this camp include M&G recovery, managed by Tom Dobell since 2000 but in 1999 headed by Richard Hughes. Fidelity special situations is undoubtedly one of the most popular funds of the past decade and remains so today despite the fact that high-profile manager Anthony Bolton left its management more than a year ago.

Another Fidelity giant that has been talked about over the years is South-east Asia, once run by KC Lee and now headed by Allan Lui.

Schroder Tokyo, managed by Denis Clough in 1999, who has since left, remains on many buy lists for its longevity in performance. Over 10 years, the fund is ranked the fourth-best performer in its sector, according to Trustnet figures.

In looking at the managers themselves who performed well through the raging bull market of the late 1990s and remain popular today, whether they are on the same fund or not, there are a few standout names in each sector.

Gartmore European selected opportunities manager Roger Guy was well known in the 1990s and although smaller companies rose in popularity in 1999 and his performance fell off, Guy remained a top select for many intermediaries. Still running the fund today, the portfolio is ranked fourth in the Europe ex UK over 10 years, according to Trustnet figures.

Within Japan, the currently popular SG’s Japan core manager Stephen Harker was known for his performance, then on Prudential Japan. Martin Currie Japan has also retained a following over the years and although Michael Thomas headed the fund in 1999 and left in 2004, current manager Keith Donaldson worked on the fund in the late 1990s.

The US market has never been an overly popular area so there are few managers who have maintained popularity throughout the 10-year period. Among those who persisted and retained their profile are Gam North America’s Gordon Grender and US smaller companies manager James Findlay, who at the time was running F&C’s US smaller companies. Today, his portfolio at Findlay Park remains one of the funds of funds managers’ premier choices.

The Far East has several familiar names that were top buys in both time periods. Aberdeen’s Hugh Young and First State’s Angus Tulloch have both retained strong profiles throughout the entire period. In 1999, Henderson Pacific growth was popular based on the performance of manager Heather Manners. Having left the group, Manners was out of the retail space for many years but now runs her own fund at boutique Prusik and has re-emerged as a favoured choice.

Equity income funds were considered a dying breed in 1999 but there is a marked consistency in the managers who were a buy then and remain so today. Among them are Invesco Perpetual’s Neil Woodford, Psigma income’s Bill Mott and Adrian Frost of Artemis income.

Within UK growth, Axa Framlington’s Nigel Thomas, then ABN Amro, was one of the most highly regarded managers in 1999 and today is still one of the top performers in his sector. Over the decade in performance terms, Gam UK diversified, run throughout the period by Andrew Green, was considered a solid fund in 1999 and has maintained that reputation. Over 10 years, the portfolio is number two in the UK all companies sector, just under Fidelity special sits.

Bond names have not changed much. Ten years ago, the popular fund choices were run by managers such as Invesco Perpetual’s Paul Read and Paul Causer and the team at M&G. Today, the two groups are said to be taking in millions daily into their funds.

One of the most consistent sectors in terms of the favoured buys in 1999 and also in 2009 is specialist. Merrill Lynch gold & general, JP Morgan natural resources and Jupiter Financials are all leaders in their respective fields both then and today.

Paul Kim, portfolio manager at FundQuest, says he prefers experienced managers in the current climate as they have worked through varying market conditions. He says: “They performed then and are still performing well now. These managers are pragmatic and not scared rabbits staring into the headlights. They can rationally and calmly assess and apply their knowledge.”

How is experienced defined? Is it the number of years behind a fund that matters most? John Husselbee, CEO of North, says in terms of experience, he looks for “people who have high integrity, can demonstrate technical competence of what they do and have proven it over several cycles. Managers like Woodford and Frost fit into those boxes. What they say is what they do.”

Considering the style in favour in 1999 and what it takes to navigate markets today, it is surprising how many names appear in both timeframes and they are not managers who have changed their styles to suit the market.

Husselbee says managers of note tend to be pragmatic stockpickers and have a process that can evolve with the times.

Hargreaves Lansdown investment manager Ben Yearsley says: “Very few survived the decade because their style was boom and bust.”

Those that have stayed at the top may not be number one in each year but over the longer term their popularity is attributable to their consistency.

That is not to discount the importance of younger managers coming through. Funds of funds managers say whether the younger set makes it through this market and into the next cycle is something to watch.

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Signs of the times

Naturally, I would never dream of contradicting the good, good people of Fidelity or indeed other less fervent preachers of the gospel that, when it comes to investing, it is time in – rather than timing – the market that counts.

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