Small funds ‘more consistent performers’, says Thames River research

Smaller funds are more likely to deliver consistent performance than their larger peers, according to research by Thames River Multi‐Capital.

Rob Burdett
Rob Burdett

The asset manager examined the performance of funds in all 33 Investment Management Association (IMA) sectors over the three years to September 30 and found small funds had a stronger chance of showing consistent above-median performance.

In two‐thirds of the sectors, portfolios of below‐average size were more likely to have outperformed consistently over the last three years.

Furthermore, 61% of the 313 funds in all sectors that delivered above‐median performance in each of the years were smaller than the average fund in their sector.

Smaller portfolios “significantly” outnumbered larger funds among the consistent performers in the IMA Active Managed, Asia Pacific, Global Bonds and UK All Companies sectors.

However, the research found this trend was “particularly noticeable” in UK Equity Income, where eight of the nine funds that outperformed were of below‐average size. The Artemis Income fund was the only large fund in the sector that displayed consistent outperformance over the three years.

Only the Global Emerging Markets sector went against the trend, as 80% of persistent performers were bigger than the sector’s average.

Rob Burdett, co‐head of Thames River Multi Capital, says: “Overall the fact that smaller funds have done better is no surprise.

“Smaller funds can be more nimble and such an attribute has perhaps been especially useful over the last three volatile years.”

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