Back in April 2015 I wrote this article on the topic of which were the best fund managers for share market investors to invest in.
For reference I am referring to the management groups themselves, not the underlying funds they manage that are also often listed on the local market.
Below is what I awarded the managers as investment ratings out of 10 in April 2015 and how the shares have performed in the 4 years since, not including dividends.
AMP Limited (ASX: AMP) rating 3 out of 10, down 67% since April 2015
BTT Investments now (Pendal Group Ltd) (ASX: PDL) rating 6 out of 10, down 24% since April 2015
Macquarie Group Ltd (ASX: MQG) rating 8 out of 10, up 45% since April 2015
Magellan Financial Group Ltd (ASX: MFG) rating 9 out of 10, up 110% since April 2015
Perpetual Limited (ASX: PPT) rating 2 out of 10, down 28% since April 2015
It's also worth noting that just because I am giving some of the fund managers themselves low ratings doesn't mean there's not plenty of smart people and strong money managers working at these businesses.
It's just that in my opinion the businesses as a whole are not as well set up as others to deliver good shareholder returns.
As we can see the ratings proved a good guide for investors as to what businesses to buy, although I don't have time to explain in this article what does or does not make for an investment grade fund manger, I have explained in some detail in plenty of old articles on Magellan or Perpetual for example.
Given this guide proved worthwhile in 2015, I'll update the ratings below and throw another couple of popular fund managers into the mix too.
So here are my ratings (with brief explanations as in prior article) as at May 29 2019, perhaps I will even revisit how they go in 4 years' time!
Australian Ethical Investments Limited (ASX: AEF) rating 7 out of 10, still a small cap, potential to grow institutional FUM.
AMP Limited rating 2 out of 10, well publicised problems, too bloated.
Macquarie Group rating 8 of 10, still a quality and innovative business, making a significant push into the green investment space.
Magellan Financial rating 9 out of 10, little more risk than Macquarie, but I expect could be the best performer of the bunch again over the next 4 years.
Pendal Group Ltd (ASX: PDL) rating 6 out of 10, a middle of the road business.
Perpetual Ltd (ASX: PPT) rating 3 out of 10, still struggles to attract FUM in part due to weak investment returns.
Platinum Asset Management Limited (ASX: PTM) rating 5 out of 10, outsources a lot of business development, which can make its low cost-to-income ratio deceptive.
WAM Capital Limited (ASX: WAM) rating 6 out of 10, focused on retail FUM, which is a weakness for investors anyway.
If we assume that only businesses you'd rate as at least 8 out of 10 are good enough to invest in then I'd still rate Magellan and Macquarie as the two stocks to own, with Australian Ethical as a fast-growing small-cap to consider that I've flagged plenty of times before.
