Four UK fund managers that have beaten Warren Buffett over the past 20 years

Four UK fund managers have performed better than US investment guru Warren Buffett in the last 20 years, according to a new analysis.

While there are 160 funds and investment trusts that have returned more than Buffet’s () since 2001, most are focused on smaller companies, emerging markets, or specialist themes that aren’t directly comparable to the ‘Sage of Omaha’.

But 24 of the UK managers invest in the same sort of developed market large caps, according to AJ Bell, which undertook the analysis, of which four funds have had the same manager or management team for the past 20 years.

Buffett is renowned throughout the investment world for returning an eye-popping 2,810,526% to investors since 1965, which compares to a 23,454% return from the S&P 500 – or 20% a year compared to 10.2% from the US stock market.

The research was undertaken ahead of the annual shareholder meeting, which takes place on 1 May, though the “Woodstock for capitalists” jamboree, which attracted almost 40,000 attendees last time, will take place online because of the pandemic, which might make it easier for Buffett’s devoted fans to take notes on his every uttering. 

“The Berkshire Hathaway AGM is undoubtedly the biggest investor event in the world,” says Laith Khalaf, financial analyst at AJ Bell.

With 2020 not being a vintage year for Buffett, with his vehicle only returning 2.4% versus 18.4% from the US stock market, Khalaf said the veteran investor’s extraordinary long-term track record means he remains a benchmark in human form.

“Buffett is the longest-standing, and most revered investor in the world. But over the last 20 years, a handful of UK fund managers have actually posted better performance than Buffett, while investing in comparable large cap equities.”

The four are James Anderson, Alexander Darwall, Nick Train and Michael Lindsell, who will all be familiar names to UK fund watchers, with a less heralded manager being Max Ward, manager of the Independent Investment Trust, and a former manager of Scottish Mortgage.

“These managers don’t have the US focus that Buffett does,” says Khalaf, “but that makes their outperformance more impressive, as the S&P 500 has been the best performing major index of the last two decades.”

He noted that passive funds have stolen a march on active managers when it comes to investment flows in recent years, with Buffett himself a somewhat unexpected proponent.

“Investors picking active managers have no guarantee of future success, but the longer a manager’s track record of outperformance, the greater the chance it’s been achieved by skill, rather than luck.

“Anderson, Lindsell Train, Ward and Darwall definitely sit in the skilful category, having bettered the world’s best investor over the last two decades. None can claim to be better than Buffett just yet, who’s still investing at 90, but a dazzling 20-year track record is, at least, a good start.”

Better than Buffett?

Over the last twenty years, Berkshire Hathaway has returned 507.5% to UK investors, in pounds and pence, compared to 353.1% from the S&P 500.

AJ Bell’s analysis of funds and investment trusts found 160 with posted higher returns over this period, though 61 of these invest in emerging markets, 57 invest in small and midcaps, and 18 have specialist mandates such as sector specific funds (e.g. tech, mining, or financials).

The top ten performers over 20 years

Aberdeen Standard Asia Focus – 1,975.7%

– 1,928.1%

Baillie Gifford Pacific Horizon – 1,900.9%

– 1,655.3%

– 1,620.7%

Marlborough Special Situations – 1,517.6%

Scottish Oriental Smaller Companies – 1,442.7%

Ninety One UK Smaller Companies – 1,432.9%

Jupiter UK Smaller Companies – 1,414.1%

– 1,399.7%

Berkshire Hathaway – 507.5%

Khalf said investors in the UK should…