Trustnet Magazine Issue 44 October 2018 | Seite 38

In focus
says. “Within the AJ Bell Active MPS
[managed portfolio service], we take
the view that we should only use active
managers where we think it is justified.”
“As a result, in our US exposure,
the core element of our positioning
is made through a passive holding,
Fidelity Index US. The ability to gain
US exposure for just 0.06 per cent per
year is compelling and seriously raises
the bar for active managers.”
Hughes’ main problem with the
active universe in the US is that few
fund managers have a genuine “core”
investment approach – meaning they
can outperform in both rising and
falling markets – and, as a result, lack
consistency.
He adds that while some growth
managers have done well recently,
such as Artemis, value managers have
become “almost as rare as hen’s teeth”.
“The polarised universe makes it
very difficult to find consistency
among the active funds and pushes
investors further towards the passive
solution,” Hughes continues.
“This is not helped when we look at
the S&P 500 as the US benchmark in
the UK, whereas US-based managers
are more focused around the Russell
indices which are a little broader.”
“Those managers are also much
more explicit in focusing on a
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[ SECTOR PROFILE ]
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“The polarised universe
makes it very difficult to
find consistency among the
active funds and pushes
investors further towards
the passive solution”
specific style, with many measuring
themselves against more relevant
benchmarks than the generic S&P
500, which of course has its own style
bias now given the phenomenal rise
in technology companies.”
Wavering belief
Ben Yearsley, a director at Shore
Financial Planning, admits he does not
like passive funds. Over the long run,
his preference is to have a good active
manager, of which he says there are
plenty to choose from in most markets.
“However, one market where my
belief in active wavers is the US,”
he admits. “Whether it is the size or
efficiency of the market, I don’t know,
but many US active managers have
promised, but under-delivered. Where
are the Nigel Thomases or Anthony
Crosses of the US?”
Yearsley notes that some good
managers have delivered in the US
small cap space, but this becomes
0.06%
Cost of gaining
exposure to the US
via the Fidelity
Index US fund
rarer the further you travel up the
market capitalisation scale.
“Many value managers did well in
the 1990s, but what we need is an
active fund with the ability to tilt
between growth and value,” he says.
“Instinctively I favour active, however
I would blend a core active fund with
a quantitative process – such as Ian
Heslop’s Old Mutual North American
fund – with something that has a
freer hand, such as Tyndall North
American or Artemis US Equity.”
PERFORMANCE OF SECTORS VS INDICES
Name 1yr (%)
3yr (%)
IA North America 19.33 77.91 110.96 268.33
S&P 500 20.61 84.08 131.3 296.8
IA North American Smaller Companies 21.06 86.4
Russell 2000
5yr (%)
10yr (%)
106.03 312.13
18.13 84.39 105.86 276.5
Source: FE Analytics
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