Reinventing the wheel

Whilst browsing the internet on a rainy afternoon I read an interesting article from Moneyobserver, indicating which funds they have consistently viewed as highly rated over the last 6 years - the date at which they started a shortlist of rated funds. It got me wondering whether these highly rated funds and their managers were all invested in the same small pool of businesses, or whether they were all heading off in different directions.

If I assume that all fund managers have at least a rather generic goal of trying to increase the value of their holdings, if there are great similarities in their portfolios, maybe I could take a leaf from their books.

But which funds?...a rummage on moneyobserver gave me a few options so I selected a basket from the following pages:
https://www.moneyobserver.com/which-rated-funds-have-kept-their-rated-stamp-our-shortlist-was-launched
The UK and global (not-emerging markets) categories here:
https://www.moneyobserver.com/money-observer-2018-fund-awards-performance-and-reliability-winning-mix
And the top 10 best performing funds over 5yrs from here:
https://www.moneyobserver.com/money-observer-rated-funds?sort=desc&order=Perf.%205Y

That gave me an initial group of 46 funds, with 3 duplicates, leaving 43 to play with.

And to make this a little more manageable:

• include only the top 10 holdings in each fund
• include only only those businesses listed on the FTSE
• ignore % of the fund portfolio allocated to that equity

Rather than try to navigate the webpages of each fund I used Hargreaves Lansdown to grab the top 10 holdings of each fund to make life easier.

Once I removed funds without any FTSE listed holdings in their top 10 I had the following 24 funds:

AXA Framlington monthly income

Bailie Gifford global income growth

Bankers it

Barclays UK lower cap

CFP SDL Buffetology

Franklin UK rising dividends

Impax environmental markets it

JPMorgan uk strategic equity fund

Jupiter European opps it

Jupiter UK smaller companies

Lindsell Train Global Equity

Man GLG uk income

Marlborough UK micro cap grth

Marlborough UK multicap growth

MI Metropolis values

Newton global income

Royal London sust world trust

Slater recovery

Sli global companies

Threadneedle mthly extra income

Threadneedle UK equity income

TM Cavendish aim

Troy income & growth

Witan it

A few familiar names, and a sprinkling of the esoteric. The Threadneedle funds had the same Top 10, albeit with different weightings, so I dispensed with one of them. It did strike me that it was a bit cheeky to run two funds with the same holdings...

Next, I took the complete list of different shares, 93 different businesses in total, removed duplicates and counted the number of times each appears in a fund. Those that appear in more than one fund are below:

Business	No. Funds
Royal Dutch Shell	7
GlaxoSmithKline	6
Diageo	5
Unilever	5
Lloyds Banking Group	4
RELX	4
Experian	4
AstraZeneca	4
BP	4
Imperial Brands	3
Craneware	3
HSBC	3
Prudential	3
British American Tobacco	3
Rentokil Initial	2
Phoenix Group Holdings	2
Reckitt Benckiser Group	2
London Stock Exchange Group	2
RWS Holdings	2
Rio Tinto	2
Bellway	2
Homeserve	2
Dart Group	2
JD Sports Fashion	2
Smith (DS)	2
AB Dynamics	2
Serica Energy	2

If I was using this as a basis for my portfolio, I would remove the banks and mining companies, simply because I don't understand them. I don't claim to know how each of these work, but I don't rate my changes of accurately estimating the leverage risks associated with HSBC, or the direction of the global commodity markets that drive Rio Tinto's revenues. Perhaps obviously there are most of the largest names in the FTSE 100 topping the list, makes me wonder why you'd pay a management fee to someone to buy these for you when it's easy enough to do it yourself.

Still, there are a couple of interesting businesses in there. Food for thought.