Thames River MMs slam underperforming funds

Thames River multi-manager heads Rob Burdett and Gary Potter’s latest quarterly report on the fund management industry shows just 2.68% have posted top quartile performance over the three years to Q2 2011.

However, the figure is up from 1.4% in Q1, with funds in the UK All Companies, UK Smaller Companies and Japan sectors delivering above average performance.

In his FundWatch report, Burdett said there has been an improvement in returns from all three sectors, which has meant the proportion of funds delivering above the median has risen from 8.6% last quarter to 13%.

He named Paul Marriage's £55m Cazenove UK Smaller Companies fund as the standout performer for Q2, returning 15.4% compared to the sector average of 2.5%, in the IMA UK Smaller Companies sector.

“Of the 1,268 funds in the universe, 34 have been top quartile in each of the past three 12-month periods. While this is a near doubling from the previous quarter, it is still at the lower end of the average range of 2%-5%,” he said.

“There was a considerable improvement in consistency ratios from previous reports covering the past three years, though from very low levels.

He added despite recently improved performance from the Japan sector, no funds have generated top quartile performance on a rolling three-year basis.

Burdett said managers have faced a tough first six months to the year, amid a volatile market backdrop. 

"There seems to be a greater improvement in the more mediocre above average consistency results but little improvement in top quality first quartile consistency."

Of 1,268 funds, 165 have produced above median returns.

"The continued lack of consistent top quartile performance indicates consistency is currently a rare commodity for many fund managers, who face ongoing challenges whilst market volatility persists."