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How funds make the Wealth 50

Over 20,000 hours of research and analysis.
Every year.

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.

175

fund manager meetings each year

3,202

fund manager records stored

1,964

funds currently under analysis

233,677

underlying investments reviewed

23,184

hours of research each year

30%

average saving on fund annual charges

The power of data

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.

Proven track record

We want at least seven years, and ideally ten years of data. We’re strict. Market cycles last about seven years, on average.

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.

233,677 shares and bonds reviewed every year

Stock selection and style

We’re trying to separate the lucky from the skilful. Talent is repeatable, and that’s what we’re after.

Our experience tells us managers with consistently good stock selection 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.

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.

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.

RICHARD PEASE
Manager FP CRUX

Richard Pease, manager of the FP CRUX European Special Situations fund, focuses on medium-sized companies in Europe, and has done for over 27 years, and 5 different funds.

The bottom line on the chart below represents his style, and you can see that this area has underperformed the overall market. But Richard Pease has outperformed the benchmark by more than four and a half times since 1992. How? We know from the data we collect that he’s been able to find and invest in great companies within these less than fertile grounds. This stock selection, represented by the top line in the chart, has delivered exceptional returns.

Source: Lipper IM, HL 30/11/2018

Annual percentage growth
Nov 13 -
Nov 14
Nov 14 -
Nov 15
Nov 15 -
Nov 16
Nov 16 -
Nov 17
Nov 17 -
Nov 18
FP CRUX European Special Situations n/a* n/a* 19.7% 24.6% 3.9%

Past performance is not a guide to future returns. Source: Lipper IM 30/11/18. *Full year performance not available

ROBIN HEPWORTH
EdenTree Higher Income

Robin Hepworth, who manages the EdenTree Higher Income fund, has a superb track record of switching between different shares and bonds to deliver an attractive income and capital growth over the long term.

It’s a similar story with Neil Woodford, who currently manages the Woodford Equity Income and Woodford Income Focus funds. He’s managed to rotate his style, investing in areas that have historically come back into fashion. He’s also shown great stock picking ability in the past, but he’s underperformed on this front over the last 2 years in his career.

Annual percentage growth
Nov 13 -
Nov 14
Nov 14 -
Nov 15
Nov 15 -
Nov 16
Nov 16 -
Nov 17
Nov 17 -
Nov 18
EdenTree Higher Income 6.4% -1.3% 13.1% 10.3% -0.3%
LF Woodford Equity Income n/a* 17.8% -0.5% 1.6% -10.9%
LF Woodford Income Focus n/a* n/a* n/a* n/a* -15.2%

Past performance is not a guide to future returns. Source: Lipper IM 30/11/18. *Full year performance not available

Face-to-face

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.

What’s their background? What type of person are they? What motivates them? And how are they incentivised? We record every phone call or email 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.

Getting you a better deal

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 the Wealth 50, the final say is left to an independent vote by our investment team. If they pass the vote, we hand over to a different part of our business who go on to secure a great price for you.

Clients received £61 Million in rebates last year

Buying a Wealth 50 fund is just the start

As a Wealth 50 investor, we’ll keep you up-to-date with any 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.

See the full list