Five UK Funds with High Alpha

Morningstar’s
glossary

defines
alpha
as
“the
amount
by
which
a
fund
has
outperformed
its
benchmark,
taking
into
account
the
fund´s
exposure
to
market
risk
(as
measured
by beta).
Alpha
is
also
known
as
the
residual
return.”

Here
alpha
is
defined
in
relation
to
“beta”,
the
second
letter
of
the
Greek
alphabet,
and
a
proxy
for
the
benchmark
and
or/the
wider
market.
Beta
is
“a
measure
of
a
fund’s
sensitivity
to
market
movements”,
our
glossary
explains.
Beta
is
usually
defined
as
a
number
rather
than
as
a
percentage.

“The
beta
of
the
market
is
1.00
by
definition.
A
beta
of
1.10
shows
that
the
fund
has
performed
10%
better
than
its
benchmark
index
in
up
markets
and
10%
worse
in
down
markets,
assuming
all
other
factors
remain
constant.”

Index
tracking
funds
and
ETFs
are
offering
beta,
which
explains
the
much
smaller
fees
in
comparison
with
active
funds.
When
markets
are
in
record
territory,

as
the
UK
is
currently,
achieving
beta
can
be
enough
for
investors.

Of
course
they
want
to
buy
funds
that
outperform
the
market
in
all
circumstances
but
that’s
much
harder
to
achieve
in
a
market
downturn. 

As
Morningstar’s
Active/Passive
barometer
shows,
the
majority
of
active
funds
do
not
achieve
alpha
over
the
long
term
when
fees
are
taken
into
account.

How
Morningstar
Calculates
Alpha

Morningstar
Direct
data
calculates
alpha
by
taking
the
excess
average
monthly
return
of
the
investment
over
the
risk-free
rate
and
subtracting
beta
times
the
excess
average
monthly
return
of
the
benchmark
over
the
risk-free
rate. 

Five
UK-domiciled
funds
with
the
highest
alpha
over
one
year
are
shown
below.
However,
31
funds
have
achieved
alpha
above
10%,
including
one
bond
fund,

Man
GLG
Sterling
Corporate
Bond,
which
is
number
six
overall.

Five
Funds
with
High
Alpha

Jupiter
India
Fund

•
Morningstar
Medalist
Rating:
Neutral
•
Morningstar
Category:
India
Equity
•
Ongoing
Charge:
0.99%
•
One-year
alpha:
24.27%

Jupiter
India
is
up
59.42%
over
the
past
year,
outperforming
the
average
fund
in
the
India
equity
category,
which
rose
30.57%.
The
£1.5
billion
fund
has
gained
15.69%
over
the
past
five
years,
while
the
average
fund
in
its
category
is
up
11.74%.

The
fund’s
one-year
alpha
is
24.27%
as
of
the
end
of
April.
The
portfolio
aims
to
beat
the
MSCI
India
Index
over
the
long
term
–
at
least
five
years.
The
strategy
remains
in
the
hands
of
a
veteran
investor
Avinash
Vazirani,
who
has
been
leading
it
since
its
inception
in
2008.
It
is
co-managed
with
Colin
Croft,
who
has
been
a
portfolio
manager
for
16
years.

WS
Morant
Wright
Nippon
Yield
Fund

•
Morningstar
Medalist
Rating:
Gold
•
Morningstar
Category:
Japan
Flex-Cap
Equity
•
Ongoing
Charge:
1.18%
•
One-year
alpha:
17.73%

The
£760.7
million

WS
Morant
Wright
Nippon
Yield
fund
rose
28.89%
over
the
past
year.
The
gain
on
the
fund
beat
the
10.18%
gain
on
the
average
fund
in
the
Japan
flex-cap
equity
category.
Over
the
past
five
years,
the
Morant
Wright
fund
is
up
10.33%,
while
the
average
fund
in
its
category
is
up
3.9%.

The
fund
measures
performance
against
the
TOPIX
Total
Return
JPY
benchmark
and
has
achieved
an
alpha
of
17.73%
as
of
the
end
of
April.
Ian
Wright,
the
longest-tenured
manager
on
the
strategy,
offers
over
25
years
of
listed
portfolio
management
experience.
In
addition,
the
fund’s
managers
include
Richard
Phillips,
Stephen
Morant,
Tom
Mermagen,
Andrew
Neil
Millward,
and
Denis
Clough.

WS
Morant
Wright
Japan
Fund

•
Morningstar
Medalist
Rating:
Gold
•
Morningstar
Category:
Japan
Flex-Cap
Equity
•
Ongoing
Charge:
1.17%
•
One-year
alpha:
17.04%

The
£676.5
million

WS
Morant
Wright
Japan
fund,
the
second
from
Morant
Wright
in
this
article,
rose
29.57%
over
the
past
year.
The
gain
on
the
fund
beat
the
10.18%
gain
on
the
average
fund
in
the
Japan
flex-cap
equity
category.
Over
the
past
five
years,
the
fund
is
up
8.35%,
while
the
average
fund
in
its
category
is
up
3.9%.

The
fund’s
one-year
alpha
was
measured
as
17.04%
at
the
end
of
April
and
is
measured
against
the
net
return
version
of
the
TOPIX
Net
Return
JPY
benchmark.
It
is
managed
by
the
same
team
as
the
Nippon
Yield
fund.

Ninety
One
UK
Special
Situations
Fund

•
Morningstar
Medalist
Rating:
Neutral
•
Morningstar
Category:
UK
Flex-Cap
Equity
•
Ongoing
Charge:
0.85%
•
One-year
alpha:
16.37%

Over
the
past
year,
the

Ninety
One
UK
Special
Situations
fund
rose
25.66%,
while
the
average
UK
flex-cap
equity
fund
gained
6.53%.
The
£458.2
million
fund
has
climbed
7.71%
over
the
past
five
years,
outperforming
the
average
fund
in
its
category,
which
rose
3.5%.

Ninety
One
uses
the
FTSE
All-Share
Total
Return
GBP
as
benchmark,
and
has
achieved
an
alpha
of
16.37%
for
the
fund.
It
is
managed
by
Alessandro
Dicorrado
and
Steve
Woolley,
who
together
have
an
average
of
eight
years
listed
portfolio
management
experience.

Artemis
SmartGARP
European
Equity
Fund

•
Morningstar
Medalist
Rating:
Silver
•
Morningstar
Category:
Europe
ex-UK
Equity
•
Ongoing
Charge:
0.87%
•
One-year
alpha:
12.72%

Artemis
SmartGARP
European
Equity is
up
26.37%
over
the
past
year,
outperforming
the
average
fund
in
the
Europe
ex-uk
equity
category,
which
rose
8.9%.
The
£201.8
million
fund
has
gained
10.54%
over
the
past
five
years,
while
the
average
fund
in
its
category
is
up
8.2%.

The
fund’s
one-year
alpha
is
only
one
basis
point
behind
the
Morant
Wright
fund,
at
12.72%.
Its
primary
prospectus
benchmark
is
the
FTSE
World
Europe
Ex
UK
Total
Return
GBP.
The
fund
is
managed
by
Philip
Wolstencroft
and
Peter
Saacke,
who
together
average
22
years
of
listed
portfolio
management
experience.  

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