View more on these topics

Thames thinks small for better performance

Thames River Multi-Capital says smaller funds tend to consistently outperform because they take sufficient risk, unlike many of their bigger counterparts.

In its latest Fundwatch survey, the multi-manager looked at the size and performance of funds in all 33 IMA sectors over three years to September 30.

It found that in two-thirds of the sectors, funds that were below average in size were more likely to have achieved consistent outperformance.

It also found that 61 per cent of the above-average performers across all sectors were smaller than their sector averages.

Thames says there are exceptions to the rule, with managers such as Neil Woodford well known for delivering excellent returns within huge funds but, most of the time, the usual economies of scale work in reverse for fund managers.

Managing big amounts of money consistently well is difficult compared with smaller, more nimble funds, where the fund managers may be creating rather than living off their track records.

In the UK equity income sector, Artemis income was the only big fund out of nine that performed consistently above the sector average.

Thames says this is due to the managers’ common-sense approach to downside risk and flexibility on the investment risk they take.

Thames co-head Rob Burdett says as funds get bigger, stock-specific and market-specific risk tends to reduce as managers struggle to move big amounts of money around certain parts of the market. Risk in bigger funds may also be reduced as investment groups balance the generation of returns with risk management.

Burdett says: “The key message is to be a bit wary of large funds and to check they still contain enough stocks in terms of tracking error bets. Look at the rate of growth in assets and the markets in which they invest.”


Out of Context

“I always felt when I was young that businessmen were pot-bellied, pinstripe-suit-wearing guys with red braces and bald heads.”

Bank holds off on monetary policy changes

The Bank of England has held the base interest at its historic low of 0.5 per cent for the 33rd month running. At its meeting today, the Bank’s Monetary Policy Committee also voted to keep the quantitative easing (QE) programme at £275bn. It was widely expected the MPC would avoid making any changes to monetary […]

Aberdeen proposes multi-manager fund mergers

Aberdeen Asset Management is proposing to merge three equity multi-manager funds into the Aberdeen Multi-Manager equity managed portfolio. The three funds Aberdeen proposes to merge with the multi-manager equity managed portfolio are the multi-manager UK growth portfolio, the multi-manager international growth portfolio, and the multi-manager emerging markets portfolio. Aberdeen has also proposed to merge two […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm