When it comes to investing, it’s easy to be dazzled by short-term wins or trends.
But what really matters is skill. Anyone can get lucky on a few bets, but true success lies within a consistent, repeatable investment process.
When it comes to funds investing in company shares, our research team looks for managers with an ability to consistently pick shares that perform well over time.
Fund managers who add value by genuinely understanding companies, not just riding market tides or styles, can offer investors an edge and the potential for returns in various market conditions.
Here, we highlight fund managers whose stock-picking has turned good calls into great results.
This article isn’t personal advice. If you're not sure if a course of action is right for you, ask for financial advice. Remember, all investments can rise and fall in value, so you could get back less than you invest. Past performance also isn’t a guide to the future.
What makes a great stock picker?
Our research team carries out quantitative analysis to identify great stock pickers for our Wealth Shortlist.
The analysis focused on managers that only invest in shares, not bonds or other assets like commodities. This is because bond or multi-asset investors often use some form of asset allocation or analysis of the wider economic environment, rather than pure stock selection.
Secondly, we focused on funds where at least one of the current managers has been in place for 10 years or more. They must’ve also performed better than the main stock market from which they choose stocks over this time.
Finally, if they’ve added value from both a style and sector perspective. This means they’ve demonstrated an ability to invest in companies that have gone on to perform well, regardless of their investment style (for example, growth or value investing) or how the broader sector a company sits in has done.
For instance, let’s say the UK’s financials sector, which includes the likes of banks, insurers and wealth managers, grows 5% in one year. However, fund manager A invests in the shares of just a few financials companies that together grow 10% over the same time. This suggests they’ve added value through stock picking from a sector perspective.
Which fund managers fit the bill?
The five managers listed below meet these criteria and have added the most value in terms of their style and the sectors they invest in combined over the past decade. As always though, past performance isn’t a guide to future returns.
These are active investors who are willing to invest quite differently from others. This improves their chance of performing better than their peers or benchmark over the long term, but the reverse is also true.
Importantly, they haven’t, and won’t, get it right every time. Each of these funds have gone through periods where they’ve performed worse than the market or their benchmark, or the manager’s stock picking has been weak.
Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
For more details on each fund, its charges and risks, use the links to their factsheets and key investor information.
The funds are listed in alphabetical order.
Artemis Global Income
Artemis Global Income aims to deliver income and growth by investing in companies from around the world. Jacob de Tusch-Lec, the fund’s manager, uses a disciplined value investment approach that’s helped drive long-term returns. Though it means it hasn’t done as well when growth stocks, including some of America’s largest tech firms, have outperformed.
As a natural contrarian, the manager invests in out-of-favour companies with recovery potential alongside smaller companies and emerging markets, and has the flexibility to use derivatives, all of which increases risk.
Artemis UK Smaller Companies
As its name suggests, Artemis UK Smaller Companies, headed up by Mark Niznik, focuses on smaller companies based in the UK. Smaller companies typically have more growth potential than larger ones, though they can be more volatile and higher risk.
Companies of this size are often overlooked by a lot of investors, which means there are plenty of opportunities for those prepared to scratch below the surface. It provides the potential to add value above investors focused on heavily scrutinised larger firms.
Baillie Gifford American
Baillie Gifford American invests in disruptive businesses with strong growth prospects based in the US. The managers’ growth style of investing aims to benefit from investing in exceptional businesses and holding them for long enough to reap the rewards. While Tom Slater is the fund’s current lead manager, Gary Robinson has been co-manager since 2014.
Investing in a relatively small number of companies, combined with the type of companies the managers invest in, can lead the fund to have larger ups and downs compared to peers. The fund also has a small amount invested in smaller companies, which are higher risk.
Fidelity Special Situations
Fidelity Special Situations’ Alex Wright, the fund’s lead manager, uses a contrarian investment approach and focuses on unloved UK companies, which differentiates this fund from many of its peers. He invests in large, medium-sized and higher-risk smaller companies that often go ignored by other investors.
While investment styles go in and out of favour over time, the manager has never deviated from his longstanding investment approach and a strong stock-picking ability has helped to drive returns. The manager has the ability to use derivatives, which if used adds risk.
Jupiter India
Jupiter India aims to provide growth over the long term by investing in companies that are primarily based in the world’s fourth-largest economy. As India’s economy and population continues to grow, plenty of opportunities for active fund managers are presenting themselves.
The fund’s managers, including lead manager Avinash Vazirani, invest in companies of all sizes and that operate in any sector, allowing them to take full advantage of opportunities on offer. Investments in small and medium-sized companies increases risk though. The fund’s focus on a single emerging country makes it a higher-risk option so it should only make up a small portion of an investment portfolio.
Annual percentage growth
31/07/2020 To 31/07/2021 | 31/07/2021 To 31/07/2022 | 31/07/2022 To 31/07/2023 | 31/07/2023 To 31/07/2024 | 31/07/2024 To 31/07/2025 | |
|---|---|---|---|---|---|
Artemis Global Income | 34.06 | 5.20 | 4.18 | 30.52 | 35.53 |
IA Global Equity Income | 23.75 | 4.83 | 6.98 | 12.58 | 9.93 |
Artemis UK Smaller Companies | 54.75 | -4.89 | -3.57 | 27.00 | -0.54 |
IA UK Smaller Companies | 54.84 | -20.39 | -8.97 | 17.55 | -2.64 |
Baillie Gifford American | 46.91 | -50.45 | 16.02 | 8.71 | 40.44 |
IA North America | 30.13 | 2.36 | 6.31 | 18.47 | 12.56 |
Fidelity Special Situations | 39.94 | 3.47 | 3.66 | 21.69 | 15.21 |
IA UK All Companies | 32.30 | -4.58 | 2.63 | 13.82 | 6.92 |
Jupiter India | 43.47 | 10.56 | 17.81 | 51.92 | -2.65 |
IA India/Indian Subcontinent | 42.93 | 10.09 | 4.93 | 31.1 | -10.08 |