How Good are UK Equity Fund Managers?

Quite remarkably, the average return of all IA UK Equity fund sectors; All Companies, Income and Smaller Companies, is greater than the relevant FTSE benchmark

Jeremy Beckwith 26 February, 2016 | 7:39AM
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It is generally believed that fund managers, being, for the most part, the market in aggregate, cannot consistently outperform – not on a gross basis, and most certainly not on a net, after-fees, basis.

However, in comparing the performance of UK equity fund sector indices, including those calculated by Morningstar and by the Investment Association, both of which are net of management fees, to the performance of various FTSE indices, the annualised returns appear to show that UK equity managers have actually performed very well over most periods up to 15 years.

Quite remarkably, the average return of all IA UK Equity fund sectors; All Companies, Income and Smaller Companies, is greater than the relevant FTSE benchmark over all of the time periods shown, one, three, five, 10 and 15 years, and this is after managers’ fees. UK equity fund managers have clearly delivered and their marketing departments are not slow to make the point.

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About Author

Jeremy Beckwith  is Director of Manager Research for Morningstar UK

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