A new analysis has found four comparable UK fund managers that have beaten legendary industry player Warren Buffett over the past two decades.
Analysts at AJ Bell found overall, 160 funds and investment trusts have returned more than Berkshire Hathaway since 2001.
Most are small and emerging markets which aren’t directly comparable, but 24 invest in developed market large caps, of which four funds have had the same manager (or management team) for the entire 20 years.
Since 1965, Buffett has returned 2,810,526% to Berkshire Hathaway investors, compared to 23,454% from the S&P 500, according to AJ Bell.
The first of the funds, set up as an investment trust, that have gone head to head with Buffett is Scottish Mortgage Investment Trust (SMT.L).
James Anderson has been running this fund since 2000 and has built a reputation on picking out the most promising growth companies of the future. Tech stocks like Tesla (TSLA), Amazon (AMZN) and Alibaba (BABA) have been particularly rewarding investments. Anderson recently announced he will be leaving Scottish Mortgage next year.
Lindsell Train Investment Trust and Finsbury Growth & Income Trust is also on the list.
AJ Bell found management duo Nick Train and Michael Lindsell have delivered exceptional returns for investors over a very long time frame, both globally and in the UK, by investing in durable, cash generative, business franchises.
Devon Equity Management European Opportunities is the third fund that Buffett may like.
Alexander Darwall invests in companies which exhibit a sustainable competitive advantage and consequently promise long term growth. Until 2019, he also managed the Jupiter European Fund which also makes it into the top 10, before leaving to set up his own fund management business.
Independent Investment Trust is also up there in terms of returns — run by Max Ward.
Ward has been running this trust since 2000, and invests on an opportunistic, go anywhere mandate, without any index constraints.
He ran Scottish Mortgage Investment Trust from 1989 to 2000, prior to James Anderson taking the helm. Ward has been a long-term backer of UK housebuilding stocks, but has also embraced technology, through a holding in Herald Investment Trust (HRI.L), and more recently through additional standalone investments.
While these managers might be running large sums of money, they are nowhere near the size of Berkshire Hathaway (BRK-A), which has a market cap in excess of $600bn.
They therefore have greater flexibility to invest in more modestly sized companies, and to exit positions more swiftly, which gives them an advantage over Buffett.
Anderson, Lindsell Train and Darwall are well known for being growth investors, which can be contrasted with Buffett’s out of favour (until very recently at least) value approach.
However, while the headline investing style may be different, there are similarities in the approaches of these managers.
AJ Bell says they are all high conviction investors, with a buy and hold approach, and a focus on the competitive advantages of the companies they are investing in.