How funds make the Wealth 50
Over 20,000 hours of research and analysis.
Every year we spend thousands of hours crunching the numbers and meeting fund managers, to uncover the funds we believe have the most potential.
Only those we feel are the very best make the cut for the Wealth 50.
And we don’t get paid for including a fund on the list.
fund manager meetings each year
fund manager records stored
funds currently under analysis
hours of research each year
There are more than 3,000 funds available to UK investors. Our analysis helps narrow the field so investors can choose from a shorter list of what we think are the best funds available.
Decided you would like to invest in emerging markets? We have four preferred funds in the sector. Want exposure to European stocks? We have four on the list.
No fund on the list will rise in value every year. Instead we aim to pick funds that can help investors build a diversified portfolio, with different drivers of returns, that – when blended together – can perform well through the market cycle.
We do not take payment for promotion
It's important to make clear we never take payment or commission for funds to appear on our favourite funds list. We only look at potential.
Ultimately, we only do well if our clients do. We earn exactly the same annual fee for every single fund. If a fund does well, your investment grows, the fund gets bigger and that is better for us too.
When it comes to our analysis, a fund manager's track record is the first port of call. Not just a performance chart, that only tells a part of the story. We need to see the individual shares or bonds they’ve invested in over the course of their career. We then transform this data so that we can use it within our own, one-of-a-kind quantitative analysis system. Our unique in-house fund data model is like an x-ray into a fund manager’s full career. We believe it helps us separate the great from the good. We can see exactly which shares or bonds a manager holds. When they bought, and when they sold, over their entire career, across multiple funds.
We need this data to cover at least five years, and ideally ten. We want to find fund managers that have performed well in the long term, and we want to see exactly how they’ve done it. For some managers we have performance data covering over 32 years.
We’re strict when it comes to experience because markets are cyclical, and these cycles on average last about seven years. We want to see whether a fund manager sticks to their process, particularly when the way they invest isn’t in favour. Often, this separates the ordinary from the extraordinary.
No manager is infallible though, and no-one can make the right calls every time. When they get it wrong, the fund will fall in value.
Ultimately we want to find managers with great stock-picking talent – those who invest in great companies, even if they're in an area that's out of favour at the moment. We’re trying to separate the lucky from the skilful. Talent is repeatable, and that’s what we’re after.
We compare a fund manager’s track record not just against their benchmark index or peers. We use our bespoke six-factor analysis; determining how a fund’s holdings size, or dividend yield has contributed to performance.
We also analyse stock selection on a geographical and sector basis; how has that particular retail stock contributed to a fund’s performance over and above the average retail stock in the sector?
We like to see positive stock selection when analysing fund managers’ track records. Our experience tells us managers with consistently good stock selection, through a market cycle, have better prospects of outperforming over the long term. There are also a few fund managers who can successfully add value through their style, changing the areas they invest in as market conditions change.
In either case it’s our in-depth analysis that lets us see exactly what they’re doing, and how repeatable we think any outperformance might be.
We separate a fund manager’s return into two parts.
Stock selection is the value added (or taken away) by stock choice in this area.
Style is where a fund manager invests – certain sectors, geographies or types of companies.
Meeting fund managers is a key part of our process. We meet more than 175 fund managers a year, totalling an average 300 meetings across the team. There’s no substitute for meeting managers face to face. We like to do it after we’ve crunched the data. It sets the agenda, we’ll ask lots of questions and challenge them. Not to make them feel uncomfortable, but to really find out about them and their fund.
We cross reference what we’ve learnt from our analysis with what they have to say. Finding out about a manager’s philosophy and process is vital. If a fund manager has underperformed the wider market, but it is because they have stuck to their process that is no bad thing.
We also want to understand their background and personality, what motivates them, and how they're incentivised. We like fund managers who are incentivised in a way that is aligned with long-term performance and rewarded over time.
We keep a record of every phone call and meeting with fund managers. What was said, and what we thought. It gives us an invaluable historical perspective, especially useful when a manager’s going through a tough time.
We meet managers several times before even considering the fund for the Wealth 50. And once a fund's been added we continue to analyse and assess it on an ongoing basis. It’s quite possible we know more about these funds and their managers than anyone else in the country.
The voting system
Each part of our process is designed to make sure the Wealth 50 is full of fund managers who can help you make the most of your money. For a new fund to make it onto the Wealth 50, following the necessary analysis, there is an independent vote by our Fund Research team.
The inclusion or removal of funds on the Wealth 50 can either be taken as part of the twice-yearly sector reviews or on an ad hoc basis. On any day, the team can propose a change to the Wealth 50 list. Any proposed change must be seconded, challenged and voted on by the Fund Research team. Every member of the team has an equal vote.
If this results in a change to the Wealth 50, this is communicated to clients who hold the relevant fund.
Buying a Wealth 50 fund is just the start
As a Wealth 50 investor, we’ll keep you up to date with new developments. For example, if we’ve just met the manager, negotiated an even better price on your fund, or your fund manager moves company, we’ll tell you.
The Wealth 50 isn't just a list of funds. It's your gateway to our research.