18 min Read
16 Mar 2017

Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

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The best performing funds to invest in right now

The best performing funds to invest in right now

Finding the best performing funds to invest in right now

In this article I highlight the best performing funds over 10 years and 5 years. I also highlight the best investment fund managers in the UK. Yet you shouldn’t just focus on past performance over 5 or 10 years alone.

As one of the most frequently quoted investment experts in the UK national press, including The Times and The Telegraph, I will show you how to pick the best performing funds to invest now. That is very different from simply opting for the best performing funds over the last 5 or 10 years.

In fact I would invest in hardly any of the top performing funds over the last 5 or 10 years and neither should you

Funds are inconsistent and you should invest in funds that suit the current economic and investment environment. I will show you how I successfully identify the funds with an increased chance of performing well going forward.

First of all...the funds to avoid

Before I move on to the best funds to invest in it's also important to be aware of the funds to avoid. Unfortunately there are a number of popular funds that should be avoided as they will hit your returns. You can download a useful list of these funds which the research calls 'dog funds'. So download the guide and use it as a reference point.

Best performing investment funds to invest in

The tables below show the best performing funds over 5 years and 10 years. All these funds can be held in a Stocks and Shares ISA or a Self Invested Personal Pension (SIPP). The percentage return shown is the total return figures which assumes all income and dividends are reinvested. The funds are grouped by fund sector so you can see the best performing funds for the most popular fund sectors. We have shown the top decile performers, rather than the top 10 investment funds, for each sector because each sector contains a different number of funds.

While the funds below would have been the best funds to invest in over the last 10 years and 5 years,  within their respective sectors, there is no evidence that they will continue to perform well as I show later. In fact taking such a long term view masks long periods of underperformance. I elaborate on this below in the section titled How to pick the best performing funds to invest in now.

The top performing funds over 10 years

Asia Pacific Excluding Japan

Fund 10 year fund performance %
Stewart Investors - Asia Pacific Sustainability 297.93
Stewart Investors - Asia Pacific 263.17
Fidelity - Asia 225.05
Schroder - Asian Income 217.01
Newton - Asian Income 195.13
Asia Pacific Excluding Japan Sector average 151.16

Europe excluding UK

Fund 10 year fund performance %
Stonehage Fleming - European All Cap Equity 238.62
BlackRock - European Dynamic 213.14
Jupiter - European 190.65
Baillie Gifford - European 165.79
BlackRock - Continental European 154.23
Europe Excluding UK Sector average 85.16

Japan

Fund 10 year fund performance %
Legg Mason - IF Japan Equity 191.74
Neptune - Japan Opportunities 154.73
Baillie Gifford - Japanese 146.51
M&G - Japan 133.67
Fidelity - Japan Smaller Companies 133.12
Japan Sector average 75.41

Mixed Investment 0%-35% Shares

Fund 10 year fund performance %
Threadneedle - Navigator Cautious Managed 76.28
Sarasin - Alpha CIF for Income & Reserves 69.8
Threadneedle - Managed Bond Focused 67.37
Mixed Investment 0%-35% Shares Sector average 38.44

Mixed Investment 20%-60% Shares

Fund 10 year fund performance %
CF Ruffer - Total Return 119.57
AXA - Global Distribution 113.23
M&G - Episode Allocation 87.08
Mixed Investment 20%-60% Shares Retail Sector average 47.34

Mixed Investment 40%-85% Shares

Fund 10 year fund performance %
Baillie Gifford - Managed 132.33
McInroy & Wood - Balanced 131.27
CF Ruffer - European 128.87
Mixed Investment 40%-85% Shares Sector average 63.94

North America

Fund 10 year fund performance %
Schroder - US Mid Cap 279.82
Baillie Gifford - American 246.76
Threadneedle - American 233.96
North America  Sector average 182.47

Sterling Corporate Bond

Fund 10 year fund performance %
M&G - Strategic Corporate Bond 100.74
Morgan Stanley - Sterling Corporate Bond 88.36
Aberdeen - Sterling Long Dated Corporate Bond 87.82
Sterling Corporate Bond Sector average 53.33

Sterling High Yield

Fund 10 year fund performance %
Baillie Gifford - High Yield Bond 93.63
Schroder - High Yield Opportunities 83.5
AXA - Global High Income 72.48
Kames - High Yield Bond in GB 70.88
Sterling High Yield Sector average 67.79

Sterling Strategic Bond

Fund 10 year fund performance %
M&G - Optimal Income 102.92
Baillie Gifford - Corporate Bond 83.37
Fidelity - Strategic Bond 82.14
Sterling Strategic Bond Sector average 51.47

UK All Companies

Fund 10 year fund performance %
MFM - Slater Growth 242.79
Royal London - UK Mid-Cap Growth 195.94
Franklin - UK Mid Cap 195.82
Standard Life Investments - UK Equity Unconstrained 183.87
Unicorn - Outstanding British Companies 175.94
UK All Companies Sector average 74.01

UK Smaller Companies

Fund 10 year fund performance %
Schroder - UK Dynamic Smaller Companies 241.43
R&M - UK Equity Smaller Companies 235.63
Marlborough - UK Micro Cap Growth 230.37
Liontrust - UK Smaller Companies 225.38
Marlborough - Special Situations 210.9
UK Smaller Companies Sector average 110.02

The top performing funds over 5 years

Asia Pacific Excluding Japan

Fund Fund 5 year performance %
Stewart Investors - Asia Pacific Sustainability 100.97
Invesco Perpetual - Asian 84.81
Stewart Investors - Asia Pacific 82.58
Fidelity - Emerging Asia 75.96
Asia Pacific Excluding Japan sector average 56.65

Europe Excluding UK

Fund Fund 5 year performance %
Marlborough - European Multi-Cap 127.8
Invesco Perpetual - European Equity 108.21
FP CRUX - European Special Situations 105.45
Invesco Perpetual - European Equity Income 104.08
Baillie Gifford - European 104.01
Europe Excluding UK Sector average 79.47

Japan

Fund Fund 5 year performance %
Legg Mason - IF Japan Equity 298.48
Baillie Gifford - Japanese 136.39
AXA - Framlington Japan 129.33
M&G - Japan 118.77
Japan Sector average 89.51

Mixed Investment 0%-35% Shares

Fund Fund 5 year performance %
Fidelity - Multi Asset Income 42.45
Sarasin - Alpha CIF for Income & Reserves 36.44
Jupiter - Distribution 36.13
Architas MA - Active Moderate Income 36.06
Mixed Investment 0%-35% Shares  Sector average 25.13

Mixed Investment 20%-60% Shares

Fund Fund 5 year performance %
Royal London - Sustainable Diversified Trust 64.54
Premier - Multi-Asset Distribution 63.2
Invesco Perpetual - European High Income 60.52
Premier - Multi-Asset Monthly Income 59.65
Mixed Investment 20%-60% Shares Sector average 34.1

Mixed Investment 40%-85% Shares

Fund Fund 5 year performance %
Royal London - Sustainable World Trust 97.8
Premier - Multi-Asset Growth & Income 79.21
Vanguard - LifeStrategy 80% Equity 71.84
Mixed Investment 40%-85% Shares Sector average 46.75

North America

Fund Fund 5 year performance %
VT - De Lisle America 164.97
Old Mutual - North American Equity 164.73
Fidelity - American Special Situations 156.76
SJP - North American 155.48
Schroder - US Mid Cap 143.37
North America Sector average 117.74

Sterling Corporate Bond

Fund Fund 5 year performance %
Aberdeen - Sterling Long Dated Corporate Bond 49.49
Alliance Trust - Monthly Income Bond 44.93
Henderson Inst - Long Dated Credit 44.92
Royal London - Corporate Bond 43.49
Rathbone - Ethical Bond 42.56
Sterling Corporate Bond Sector average 31.46

Sterling High Yield

Fund Fund 5 year performance %
Schroder - High Yield Opportunities 47.32
Invesco Perpetual - High Yield 43.4
Baillie Gifford - High Yield Bond 42.49
AXA - Pan European High Yield Bond 42.41
Aviva Inv - High Yield Bond 41.56
Sterling High Yield Sector average 31.51

Sterling Strategic Bond

Fund Fund 5 year performance %
Artemis - High Income 55.09
AXA - Framlington Managed Income 50.65
Baillie Gifford - Corporate Bond 43.34
Royal London - Ethical Bond 41.57
Royal Bank of Scot - High Yield 39.77
Sterling Strategic Bond Sector average 28.22

UK All Companies

Fund Fund 5 year performance %
CFP - SDL UK Buffettology 142.7
Old Mutual - UK Mid Cap 141.19
Barclays - UK Lower Cap 122.35
Standard Life Investments - UK Equity Recovery 117.68
AXA - Framlington UK Mid Cap 115.33
UK All Companies Sector average 58.42

UK Smaller Companies

Fund Fund 5 year performance %
R&M - UK Equity Smaller Companies 179.92
Discretionary Unit Fund Mgrs Ltd - The MI Discretionary Unit 150.87
Livingbridge VC LLP - Wood Street Microcap Investment 150.71
Fidelity - UK Smaller Companies 142.1
Liontrust - UK Smaller Companies 138.64
UK Smaller Companies Sector average 88.45

The 10 Top Performing Fund Managers

Fund managers seldom outperform the market in the short term and almost never over the long term. Yet that doesn't mean you should just invest in index trackers or Exchange Traded Funds (ETFs). There is still a place for picking the best active investment fund managers. However the top performing investment fund managers historically won't outperform the market or their peers all of the time. The table in the last section of this article emphasises the impact on your returns of your misplaced loyalty to even the best fund managers. The key is to invest in the best funds when the investment environment suits them and to ditch them when it doesn't, in favour of their peers most likely to outperform. You should NEVER invest your money with a fund manager for the long term.

The table below shows the 10 top performing fund managers over the last five years. I analysed the returns of thousands of fund managers versus the level of risk they took with investors' money to arrive at the final table. The best investment fund managers do not gamble with investors' money , instead they invest it strategically to minimise any losses. The Sharpe Ratio is a measure of the level of excess return the fund manager earns for the extra risk he/she has taken. The higher the figure the better. You will notice there is no mention of Neil Woodford.

Name Fund(s) Sharpe ratio
Keith Ashworth-Lord CFP SDL UK Buffettology 1.76
Martin Turner CF Miton UK Multi Cap Income / CF Miton UK Smaller Companies 1.75
Simon Knott The MI Discretionary Unit 1.7
Gervais Williams CF Miton UK Multi Cap Income / CF Miton UK Smaller Companies / FP Miton Income 1.69
Rob Ford / Ben Hayward TwentyFour Monument Bond / TwentyFour Focus Bond / TwentyFour Asset Backed Income 1.58
Judith MacKenzie MI Downing UK Micro-Cap Growth 1.54
Terry Smith Fundsmith Equity 1.49
Giles Hargreave Marlborough Special Situations / Marlborough UK Micro Cap Growth / Marlborough Nano Cap Growth 1.46
James Foster  Artemis Strategic Bond / Artemis Monthly Distribution 1.46
Alex Wright Fidelity UK Smaller Companies / Fidelity Special Situations 1.36

How to pick the best performing funds to invest in now

The key to successful investing is to pick the funds most likely to outperform their peers in the future. That is not the same as picking the funds or fund managers with the best performance over the last 5 or 10 years.

By way of example if you had picked the 10 best performing funds over 10 years
leading up to October 2011 (from the UK All Companies sector) and then invested in them over the next 5 years you'd have been in for a surprise. As the table below shows, over the next 5 years (to today) you would have been better off investing in alternative funds within the same sector.

Fund Performance rank 2001 to 2011 (out of 112) Performance rank 2011 to 2016 (out of 212)
Franklin - UK Mid Cap 1 83
Invesco Perpetual - UK Focus 2 27
Franklin - UK Opportunities 3 14
Cavendish - Opportunities 4 62
Artemis - UK Special Situations 5 100
Invesco Perpetual - High Income 6 84
Schroder - Recovery 7 18
Invesco Perpetual - Income 8 95
AXA - Framlington UK Select Opportunities 9 115
MFM - Bowland 10 138

So how can you choose the best funds to invest in right now? The world of fund management brainwashes investors in to thinking that you have to buy and hold a fund manager or fund. Yet why should you? The evidence overwhelmingly shows that no fund manager outperforms in every market condition. The fact that a fund manager or fund might top a table of the best performing managers (or funds) over 5 years is just a coincidence of the timeframe used. Use another timeframe (as shown above) and they won't come anywhere near the top. This is true of every fund, even the most popular investment funds. Invesco Perpetual Income, shown above, is a perfect example of a fund that historically was run cautiously and full of defensive shares such as pharmaceutical companies. In an economic downturn these shares and funds do well (after all, people still buy medicines in a recession) yet they underperform when the economy recovers.

So if you can't rely on long term performance tables to pick funds that are more likely to perform well in the future then how can you do it?

The key to investing is to chose the best funds to invest in for the current environment and to use a process that screens out the noise and emotional headlines and focuses on the fundamentals. It's a very simple process that I explain in a short email series How to become a successful DIY investor. In the emails I show you:

  • The most important investment lesson you will ever learn based on over 100 years of research and experience
  • The simple and easy to use tool that will help you beat the market
  • The investment process fund managers want to keep to themselves.
  • How to know which funds to buy and which to sell, in minutes.

I have used the technique to help investors outperform the market and professional fund managers using only a few minutes a month, using 80-20 Investor. You can read their reviews of 80-20 Investor as well as see the performance in the widget at the foot of this article. I also successfully run £50,000 of my own money live on the site to show how simple it is. 80-20 Investor helps you to simply decide the funds to invest in via your existing funds platform. Find out more about how the service works and take advantage of a 30 day FREE trial.