Neil Woodford, Terry Smith or Nick Train: which fund manager should I back in 2019?

Neil Woodford, Terry Smith, and Nick Train are probably Britains most well-known portfolio managers right now. However, while all three have strong long-term performance track records, their results have been varied over the last three years.

For example, Trains Global Equity fund has returned around 90% over the last three years while his UK Equity fund has returned 40%, which are excellent figures. At the same time, Smiths Fundsmith Equity fund has returned around 80%, which is also an excellent performance. On the other hand, Woodfords Equity Income fund has lost around 10% over the last three years, which is clearly not such a good result for investors.So, who is the best fund manager to back in 2019?

Investment style

To answer that question, I think its worth looking at the investment styles of the different managers.

Smith and Train could be classified as quality investors. Both fund managers tend to focus on high-quality companies that generate consistent growth, reinvest their earnings at a high rate, and pay regular dividends. This is quite a good strategy, in my view. Note that Smiths fund invests on a global basis, while Train manages both a global fund and a UK fund.

In contrast, Woodford could be classified as a value investor. Hes also very much a contrarian investor meaning that he tends to go for companies that are out of favour. Moreover, his approach in recent years has been to pick out under-the-radar stocks in sectors such as healthcare and technology that are not on mainstream radars. His Equity Income fund is predominantly UK-focused.

Below is a look at the top 10 holdings of the four different funds, according to data from Hargreaves Lansdown.

My pick for 2019

Considering the different investment styles of the three portfolio managers, if I was to choose one manager to go with next year, it would probably be Train.

I like his approach to quality investing, and Id be happy to own either his UK fund or his global fund, given that they both contain names such as Unilever, Diageo, and Heineken.

That said, I do like Smiths quality investing strategy as well, although some of his key holdings such as Microsoft and Facebook trade at rather high valuations, which adds a little more risk.

On the other hand, I dont see a huge amount of appeal in Woodfords fund right now. I do think value investing could come more into focus in 2019, as the growth trade that weve seen in recent years appears to have broken down. However personally, Im not convinced that Woodfords fund is the best way to play the value theme. Its a little too unorthodox for my liking, given that it contains a number of non-dividend paying growth stocks.

So perhaps Id go with Train for UK equity exposure, and Smith for global equity exposure, in order to diversify a little. As with individual stocks, it can be a sensible idea to diversify with funds, as you dont want to be overexposed to one particular manager in case they underperform.