Gartmore tops fund league: Clare Dobie reports on a second victory following heavy overseas investment

GARTMORE has easily beaten its rivals to win the Independent's 1992 league of pension fund managers, the second time it has topped the table.

Runners-up were Phillips & Drew Fund Management, continuing its strong performance, and M&G, which recovered from earlier weakness.

Newton Investment Management produced the best performance over five years, with PDFM and Gartmore runners up in this category.

David Watts of Gartmore said: 'It was an exceptional year. We fired on all cylinders. But we are not stupid enough to deceive ourselves it will ever happen again.'

Its funds were heavily invested in overseas markets and in dollar-denominated assets including US bonds. It was underweight in Japan, which fell during the year, and overweight in the Pacific Rim countries.

In Europe Gartmore held quality growth stocks rather than recovery prospects. The strategy was not, however, so successful in the first quarter of 1993, when recovery stocks came into their own.

Also in 1993, Gartmore has sold further Japanese shares - which have risen - and taken a profit on its dollar holdings, moving money out of US bonds into index-linked gilts.

Mr Watts believes the UK stock market will rise later this year, helped by an interest rate cut. But he said: 'It is difficult to be wildly bullish about any market.'

Firms that produced the best performance added to their business during the year. Gartmore added pounds 3.8bn and PDFM added pounds 3.7bn to their UK pension funds under management. Investment fees are charged as a proportion of funds under management so these firms will have boosted their revenues.

Lazard Investors tumbled from top of the 1991 table to bottom of the 1992 table (including property) and its UK pension funds under management declined by pounds 1.6bn.

Fleming was another firm to figure at the bottom end of our performance table (excluding property). It points out that a growing proportion of its business is in specialist rather than balanced management.

The table covers the performance of large investment managers running traditional funds, which are designed to outperform the FTA-All Share index, unlike indexed funds, which are designed to perform in line with the index.

Other firms to attract new pension business during the year include Barclays de Zoete Wedd Investment Management, with an extra pounds 3.4bn, which concentrates on indexed and specialist fund management. Legal & General, which declined to take part in the table, also won new business during the year.

Kleinwort Benson, Baillie Gifford and Mercury Asset Management declined to take part. Mercury's performance has improved since 1991, according to industry sources.

James Capel Asset Management, which now includes Midland Montagu Asset Management, declined to provide weighted averages. And County NatWest Investment Management had not received audited figures last week.

Pension funds have reduced their holdings of conventional gilts in 1993, dampening the Government's hopes of increased take-up as it steps up its issues of gilts.

The average fund had 2.5 per cent of its portfolio in UK fixed interest stocks at the end of March, compared with 3.3 per cent at the start of the year, according to CAPS, the performance-measurement firm.

----------------------------------------------------------------- PENSION FUND PERFORMANCE Weighted average returns % ----------------------------------------------------------------- 1992 1988-92 Pension Incl prop Excl prop Incl prop Excl prop funds pds bn Baring 21.9 22.5 13.8 14.0 6.1 Clerical Medical 21.6 22.2 14.0 14.3 1.4 Fleming Invest. - 17.5 - 13.2 7.4 Gartmore 26.2 26.2 15.5 15.5 10.3 Hambros 20.4 20.4 13.3 13.2 2.7 Henderson Admin. 20.4 20.4 13.3 13.3 5.0 Hill Samuel 21.0 23.1 13.6 14.1 4.0 Invesco MIM 20.7 20.5 12.5 12.4 2.1 Lazard Investors 17.1 17.9 12.2 12.4 1.1 Lloyds Invest. 18.9 18.9 13.8 13.8 4.9 M&G - 23.5 - 13.8 2.4 Morgan Grenfell 20 20.5 13.0 13.5 5.7 Newton * 21.2 - 16.2 - 2.7 PDFM 24.4 25.3 15.6 15.7 22.3 Prudential Portfolio 20.0 20.2 13.6 13.7 11.9 Rothschild Asset 20.3 20.4 13.5 13.6 1.8 Schroder Investment 20.4 20.7 14.5 14.6 18.4 ----------------------------------------------------------------- *Three different measurers -----------------------------------------------------------------

(Photograph omitted)