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Active management demonstrates benefits in volatile markets

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Despite a difficult year for investors, the 2020 FE fundinfo Alpha Manager award winners have once again demonstrated the benefits of active management in volatile markets, by continuing to beat their benchmarks throughout the economic downturn.

Data from leading fund data and technology company FE fundinfo reveals that ‘Best Alpha Manager’ winners Julian Fosh and Anthony Cross from Liontrust have not only managed February and March’s downturn better when compared to the IA UK All Company sector, but have also been able to capitalise more quickly on April and May’s upturn. While, like the rest of the industry, their Liontrust UK Growth Fund fell sharply during the sell-off, it recovered quickly from its mid-March low, managing to generate a positive return of nearly 2 per cent just three months later, something the IA UK All Company Sector has yet to achieve this year.
 
Elsewhere, the other FE fundinfo Alpha Manager winners in the equity sectors have also followed this trend. In the US equities sector, joint winners Nick Ford and Hugh Grieves from Premier Miton generated even more impressive returns, with their Premier Miton US Smaller Companies fund gaining 18.23 per cent from the end of February until July, compared to 9.01 per cent in the IA US Smaller Companies sector during the same time period. James Thompson, who won in the Global Developed Equities Alpha Manager category saw his Rathbone Global Opportunities fund return 19.76 per cent up until the end of July, compared to the IA Global Sector’s return of 7.38 per cent at the same time, while Ezra Sun who won the ‘Best Alpha Manager Asia Pacific Equities, including Japan’ award, also saw his Veritas Asian fund outperform all of the IA Asia Pacific Exc Japan, IA Japan and IA Japanese Smaller Companies sectors from March to July.
 
Charles Younes, Research Manager at FE Investments, says: “2020 may not have been a good year for investors on the whole, but it has at least once again shown the importance of active management styles when the global economy runs into difficulties and how they can navigate difficult waters better than many tracker funds. As our FE fundinfo Alpha Manager winners show, the successes they enjoyed last year in comparatively benign markets were not ‘one-offs’. In almost every category the 2020 FE fundinfo Alpha Manager winners have once again delivered over and above their sector benchmarks; not only in avoiding the worst of the slump, but also being able to respond quickly to changing markets to deliver positive returns. This has been particularly impressive in sluggish markets such as the UK where its economy has been hit harder than most.
 
“One of the main benefits of active management is that it allows investors a range of different and adaptable strategies which are often better placed to weather the impact of sharp market changes. Liontrust’s ‘Economic Advantage’ strategy for example shows that by investing in companies with structural competitive advantages, they are less impacted by the whims of the market.”
 

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