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Vector Navigator – Bart van de Ven’s favourite fund

Accuro has held the Vector Navigator fund since the company was founded in 2006. Since then, the fund has outperformed its peer group during all but two years. Vector Navigator owes its stellar track record to the factor-based investment process centred on identifying stocks that are are undervalued due short-term inefficiencies in the market.

“Earnings revisions, analyst recommendations and momentum are important factors in their investment process,” says van de Ven. The fund’s investment horizon is only three to nine months which means the managers engage a lot in trading. “Vector runs the model on a weekly basis. Based on the results of the model they trade typically 4-5 stocks a week,” explains van de Ven.

Though this strategy could prove costly if bets don’t pay off or if liquidity deteriorates, it has so far paid off for managers Werner Smets and Thierry Vandeghinste, the two managing partners of Vector Asset Management who have been jointly managing Vector Navigator since 2007.

Top-decile

The fund has comfortably beaten its global equity peer group and the MSCI World Index on a three-, five- and 10-year basis. Accuro has reaped the benefits of this, as the company has remained invested in the fund on behalf of its clients throughout this period. Annualised performance over five years is most impressive, at 16.51%. This beats 96% of the fund’s peer group, Morningstar’s global large-cap blend equity category.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016, however, marked a trend breach: Vector Navigator underperformed for the first time since 2008, delivering a performance of 6.05%. This was 0.64% below the peer group average. “The fact that sectors with weak fundamentals such as banks and commodities outperformed in 2016 made life quite difficult for the managers. But a year of underperformance is not a concern to us, since the managers have proven over an exceptionally long period that they can deliver alpha. We believe last year was an exception.”

Small is beautiful

Despite its phenomenal track record, Vector Navigator only has some €168m in assets under management. This may be partly due to the limited popularity of global equity funds among European fund buyers, which have seen net outflows over the past few years. But the main reason for the fund’s small size, believes Van de Ven, is that attracting assets is not the priority of the managers. The fund ranks 48th in its category in terms of net inflows over the past five years, while it ranks 10th for performance net of fees.    

“The managers just aren’t sales guys. Despite their success, Vector Navigator remains relatively unknown,” he says. But that’s not a problem for the Dutchman. “When a fund becomes bigger, it often struggles to perform on the long run. We like boutique managers and are often early adopters. We were not only among the first investors with this fund, but also with the global equity funds of Comgest, Skagen and Etna some years ago, though we are not anymore invested in the latter two.”

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