SharingAlpha, the platform that allows fund selectors globally to rate their preferred funds and build up a performance ranking of their own, has published a list of the top 10 ranked selectors based in Europe according to performance through 2017.
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Comments from a number of these ranked selectors explain their approach.
Thierry Guerillot, Myria AM
“We manage two different kinds of funds of funds:
- Diversified funds: as our asset managers want to build up an asset allocation by themselves, we try to look for best in class funds in the equity, bond and alternative fields
- Alpha funds: these funds are mostly invested in equity funds and we hedge the market risk. We need to find funds with a stable beta and a high and regular alpha on hedgable markets.
“Considering the investments in equity funds, for example, my approach consists of building up model minorities by region (eurozone, Europe, emerging markets) or country (France, Japan, US).
“These model ports are reliably equi-weighted and mix alphas on several factors such as quantitative / qualitative funds, defensive / high conviction funds, value / growth funds, smid / large cap funds, single-only asset manager / collegial organisation or systemic funds. Our goal is not to put all our eggs (or kinds of alpha) in one basket!
“To identify good candidates for a due diligence, I am first interested in tracking their behavior during crisis or stressed times. We have a bi-monthly short listing committee where I discuss with our two fund of fund asset managers of the new possible names and the ones we could get rid of.
“I try to share our new ideas of investments with the community of SharingAlpha as often as possible when there are quite good and rare alpha to be selected by us.
“My best picks last year were:
- Artemis US Extended Alpha
- Seilern Stryx America
- Edgewood L US Select Growth
- Loomis Sayles US Growth Equity
- Ossiam Shiller Barclay Cape US Sector Value (US equity)
- DNCA Invest Europe Growth
- Dorval Manageurs Europe
- Ulysse LT Funds European General
- Actions 21
- Sycomore Francecap (European and French equity)
- Sparx Japan (Japan equity)
- Lyxor / Chenavari Credit
- Robus Mid Market Value Bond Fund
- T Rowe Price European High Yield Bond Fund (Bond funds).
“Presently, we have a short list of 106 Ucits.
“Myria AM is a 100% subsidiary of UFF (a French network of financial advisers, part of Aviva Group). We are specifically dedicated to our mother company and its clientele of affluent market individuals. We manage for UFF 6 funds of funds totaling €450m of assets. I have been part of Myria AM since its inception in 2014. Beforehand, I had worked for UFF since 1989, and was notably in charge of the development of its financial products activity. I organised my first tender for choosing an asset manager for a French equity white labeled fund in 1992. I am a chartered accountant.”
Nick McBreen is an award winning, fee-based IFA and brings to his work a practical understanding of what it takes to run a business. An early adopter and user of WRAP platforms, Nick specialises in investment, estate and retirement planning areas and is a regular commentator on financial planning matters in the local, national and industry press. Nick also has a strong interest in socially responsible investment, regularly features on BBC Radio and television and is a frequent panel member at financial services industry events in the UK and judge on industry awards.
“Clients I work with are primarily private individuals and SMEs with a need for investment advice and income generation..this I provide as an integral part of an overall financial planning service.
“Length of time in industry? I joined business in 1989.
“Response to ranking? Recognition by peers in the investment arena is high value and I view it as an endorsement of my skill and ability to identify funds and asset classes that offer fair value and potential upside for investors. Serves as a very valuable proof statement when shared with clients.”
Ignacio Martín Ocaña
“My Fund selection process is named RFA (‘Research for Fund Approval’) and is based on ‘4Ps’: Performance – People – Philosophy and Process.
“I firstly apply a ‘Performance’ quantitative filter with annualized performance and volatility of at least three years, applying a Sortino Ratio (specifically in alternatives and absolute return Funds with NO benchmark) and the Information Ratio (for those with a benchmark) to get some insights on the ‘consistency’ of that past performance. Then, I complete the analysis with the beta of each fund (important! Against the same benchmarks per asset class) the downside risk and finally … my favorite one: Calmar Ratio to get the comparison of the average annual return and the maximum drawdown of a long past period of time.
“Finally, I try to get the TER of each fund based on the reported fees and I spent a lot of time with the other ‘Ps’ (people-philosophy and process) as qualitative filters based on competitive advantages, product differentiation and approach to the markets of each Fund, then putting it all into peer groups based on ‘my own categories’ to get the final list of funds selected for each asset class.
“A brief description of the clients I serve: A mixed bag of clients … although 80% are primarily institutional and the 20% rest are wealthy people.
“I have been working in the industry since 1999 (nearly 20 years), starting as a trader in the sell-side but passing quickly to the buy side as a senior fund manager.
“I appreciate very much standing out with a triple alpha rating in 2017 as it reflects our high conviction fund list in each asset-class that has resulted in highly positive returns for our clients.”
“I am very pleased to be ranked among the top 10 fund selectors by SharingAlpha. Next to asset allocation, fund selection is the biggest contributor to returns and could well make the difference between a mediocre and a decent return in any portfolio. I am very much looking forward to 2018 and the challenge of maintaining my position.
“Most of my clients are professional intermediaries. I am a consultant at the ratings agency FundCalibre Ltd and head their investment trust ratings service. I also manage a select number of private client portfolios.
“I have been in the financial services industry since 1984 with a focus on investment management, having managed private client portfolios as well as funds. Over the years I have learned the best way to select a fund / manager is to combine common sense with quantitative analysis, notwithstanding that the starting point is future expected returns for different asset classes. This single point determines the type of funds and fund managers to look for. I have also learned not to be too proud and admit when I am wrong and not forgetting that the ‘first cut is the cheapest’!”
“A quantitative and qualitative approach, as many others, aiming to develop a long-term ‘relationship’. The final outcome finds a fund with a consistent long-term performance managed by a stable and experienced team that implements a robust investment process having a manager able to create value while mitigating risk.
“Our team selects mainly products for discretionary mandates while also using this selection for Millenium’s BCP Retail Banking, Private Banking (Portugal and Switzerland) and Web Banking.
“I’ve been in the industry for almost 10 years, through different wealth management roles and countries, as an investment adviser in Switzerland and Luxembourg, as a portfolio manager and fund selector in Portugal.
“I’m glad [of the ranking]. It is positive for our selection process. It also enables me to build-up my personal track record within SharingAlpha.”