PRESS RELEASE
27 February 2003
Portfolio Turnover: First Comprehensive Research
Fitzrovia International has produced the first comprehensive analysis of portfolio turnover for Unit Trusts and OEICs - providing the fund industry with a unique guide to how actively each fund is managed.
The research reveals wide differences in average portfolio turnover levels among fund management companies, reflecting distinctive investment styles and strategies, with those companies averaging above 78% appearing in the highest quartile (* see Notes).
Portfolio turnover is the degree of buying and selling a fund has undertaken over a year and is the key driver of dealing costs.
In light of this research, and alongside recent comments by Paul Myners, former chairman of Gartmore Investment Management, urging attention on the issue of portfolio turnover and its associated costs, Fitzrovia supports efforts for clear disclosure of portfolio turnover figures - as in the US.
The research shows that the median average portfolio turnover for actively managed equity funds is 54%. Based on the estimates included in an FSA paper, such turnover levels could incur annual costs of between 81 and 97 basis points (see Note on Trading Costs).
The Fitzrovia data enables fund management companies to assess better their competitive positioning, and, especially when investment conditions are difficult, to help differentiate the relative strengths of funds.
Notes to Editors.
* 78% is the threshold for the highest quartile for average portfolio turnover among the 83 companies with at least 3 actively managed equity funds. The lowest quartile includes those companies with an average below 48%.
Portfolio Turnover of UK Funds is available from Fitzrovia International plc.
For further information, please contact:
Ed Moisson, Associate Director, Communications
Tel. 020 7494 6160
Fund Promoters’ Average Portfolio Turnover Levels
Actively managed equity funds only.
All companies shown in these tables have a minimum of 3 funds.
Source: Fitzrovia International.
Fund Promoters with Low Mean Average Portfolio Turnover
| Portfolio turnover | |||
|---|---|---|---|
| Promoter | Mean | Minimum | Maximum |
| Allchurches | 9.6% | 5.3% | 16.5% |
| MGM | 22.4% | 13.1% | 35.4% |
| ABN Amro | 25.0% | 15.1% | 45.0% |
| Bank of Ireland | 25.1% | 18.6% | 28.2% |
| Singer & Friedlander | 31.2% | 7.6% | 54.2% |
| Barclays Global Investors | 36.3% | 16.6% | 68.7% |
| Friends Provident | 37.4% | 15.9% | 134.7% |
| F&C | 40.2% | 3.3% | 61.2% |
| HSBC | 40.2% | 12.6% | 75.2% |
| Scottish Life | 40.5% | 11.9% | 95.2% |
Fund Promoters with High Mean Average Portfolio Turnover
| Portfolio turnover | |||
|---|---|---|---|
| Promoter | Mean | Minimum | Maximum |
| Artemis | 176.2% | 82.3% | 239.1% |
| Britannic | 155.7% | 52.3% | 326.4% |
| Sarasin | 141.1% | 110.0% | 181.5% |
| Thesis | 140.2% | 35.2% | 321.5% |
| Framlington | 125.1% | 37.4% | 495.1% |
| Halifax | 123.7% | 9.4% | 359.0% |
| JO Hambro | 109.6% | 96.0% | 134.9% |
| Legal & General | 109.1% | 14.7% | 399.2% |
| ISIS | 104.4% | 47.6% | 167.8% |
| Gartmore | 102.5% | 46.2% | 257.2% |
Note on Trading Costs
The FSA Occasional Paper 6 (The Price of Retail Investing in the UK, page 23) estimated that UK trading costs were about 180 basis points (covering commission, bid/offer spread, price impact, stamp duty), although it was suggested that a more conservative estimate may be closer to 150 basis points. Using these estimates, there could be an impact on performance of 0.15% to 0.18% (for 10% portfolio turnover), 0.75% to 0.90% (for 50% turnover), and 1.50% to 1.80% (for 100% turnover).