HEAD-TO-HEAD: Merian versus Schroders

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Source: FE Fundinfo. Three-year cumulative returns in US dollars.

Performance

Both funds have underperformed the UK stock market over the long-term.

The Merian product has suffered a 14.08% three-year cumulative loss in US dollar terms, and the Schroder fund has performed significantly worse, posting a 27.96% loss, according to FE Fundinfo data.

The FTSE All Share index is also down during the same period, but its loss is only 8.31%.

“These funds have faced several headwinds, notably Brexit and the sharp economic downturn induced by the coronavirus pandemic,” said McDermott.

“Their value tilt also hasn’t done them any favours for the past several years, compared with growth strategies which have typically been more successful,” he added.

The best calendar years for the Merian fund in the past five years were the up-markets of 2019 and 2017, when it returned 26.13% and 23.97% respectively, according to FE Fundinfo.

“Buxton has generally delivered his best performance in a rising market, (including since the market lows in March), but the fund may struggle during a recession or a wider market fall as we saw at the start of this year,” said McDermott.

The fund is up 44.28% since 23 March, which is higher than the FTSE All Share index (41.54%) and the Schroder fund (32.11%), FE Fundinfo data shows.

The Schroder product tends to have performed relatively better in down-markets, holding up better than the Merian product in 2018, 2016 and 2015.

However, so far this year it has underperformed the Merian fund and the index, down 30.32% compared with falls by its rival of 23.34% and 18.73% by the index.

Both funds have experienced significant net asset value fluctuations during the past three year. The Merian product has annualised volatility of 24.75% and the Schroder product has 25.7% volatility, according to FE Fundinfo.

Low returns and high volatility has meant that their information ratios (a measure of risk-adjusted returns) are both negative.

Discrete annual performance

Source: FE Fundinfo. Annual returns in US dollars. *to 18 September 2020

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