The latest version of the annual Fund Family 100 has just been published. This report looks in detail at Europe's 100 biggest asset managers, judging them by a range of different criteria.
When Morningstar evaluates fund families, we strive to identify which firms are in business to maximise their own profits and which firms build a fiduciary relationship with their investors. In our view, firms that put investors first and align their interests with their shareholders' will succeed in the long run.
In addition to a fund company's regulatory history, Morningstar's research considers:
Corporate culture: Morningstar's analysts assess this primarily on a qualitative basis through regular on-site due-diligence visits (whenever possible) and meetings with senior management and others in important functions. The strongest corporate cultures exhibit a clear mission to put investors first and are able to attract and retain professionals who can execute that goal.
Alignment: Analysts evaluate whether portfolio managers' financial interests are aligned with those of investors. Morningstar also considers fund companies' approach toward the fees they charge investors, who have increasingly sought out lower-cost options.
We analyse how top fund families in Europe practice these principles in the Fund Family 100. This report launched in the first-quarter of 2019 and September 2021 marks its fourth edition.
The report compares the largest 100 fund families (as measured by assets under management for funds available for sale across Europe) across key metrics such as manager retention and tenure, quality of the fund range, fees, and Morningstar Sustainability Ratings. Below are some of our key findings.
Top-ranking fund families for Morningstar Medalist shares
Morningstar's Parent Pillar is one of the four pillars included in the Morningstar Analyst Rating. Among the firms with the highest percentage of Morningstar Medalist share classes - with a rating of Bronze or above - 16 out 20 received a Parent rating of Above Average or High. The maximum rating of High has been awarded to Vanguard, Dimensional, and T. Rowe Price. Fundsmith, First Sentier Investors, and Comgest have the highest share of funds with Morningstar Analyst Ratings of Gold, Silver, or Bronze.
Fundsmith stands, in our view, as an example of an investment boutique that is well-placed for investment excellence. The group has just three strategies, and they follow the same investment philosophy and process. Key personnel are heavily invested in the funds they run, making them well-aligned with investors' interests. The firm's Parent rating is Above Average.
Comgest has a solid investment culture. Assets have grown significantly in the past 20 years to EUR 27 billion, but the firm has remained true to its "quality and growth" approach and has regularly strengthened its teams accordingly. The asset-weighted proportion of its medalist share classes reaches roughly 68% of the firm's offerings. The firm's Parent rating is Above Average.
Top-ranking fund families for manager tenure
Average manager tenure is a measure of team stability. The average portfolio manager tenure stood at 7.1 years, based on funds available for sale in Europe offered by the top 100 asset managers we reviewed as of 2 Sept 2021. When adjusted for missing manager disclosure, three asset managers that are positively rated by Morningstar analysts rank among the best: Dimensional earns a High Parent rating, while Comgest and Ninety One both land Above Average ratings.
Dimensional combines high manager retention (average manager tenure of 10.8 years) with full transparency in its management teams' disclosure. While the firm saw some turnover in mid-2019 when former co-CIO Eduardo Repetto and members of his team left to work for a competitor, this wave of departures was relatively small and short-lived. The firm’s ability to recruit, develop, and retain talent remains strong.
Ninety One also displays stability and excellent disclosure levels. The firm's spin-off from its parent Investec Group in March 2020 doesn't seem to have destabilized its investment personnel: Management teams remain relatively long-tenured (7.1 years on average) and well-resourced.
Top-ranking fund families for Morningstar Sustainability Ratings
Finally, we measured firms by the percentage of funds in their range that earn Above Average Morningstar Sustainability Ratings (4 or 5 globes). As shown below, Comgest, Capfi Delen Asset Management, and Swedbank ranked best among the top 100 asset managers we reviewed.
Comgest, which features among the firms with the highest percentage of medalist share classes and the longest-tenured management teams (average tenure stands at 8.6 years), also demonstrates strong environmental, social, and governance credentials. The firm displays the highest concentration of funds earning Morningstar Sustainability Ratings of 5 and 4 globes within its fund lineup at 69% of its offerings.
ESG risk management is a natural part of Comgest's well-entrenched quality-growth approach. In the past seven years, the firm has formalised the incorporation of ESG factors into its standard investment process to the point where it has a systematic and tangible impact on investment decisions.
