17 min Read
28 Mar 2019

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 best funds to invest in 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 to invest in 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.

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 %
Schroder Asian Alpha Plus 329.02
Baillie Gifford Pacific 301.43
Invesco Asian (UK) 268.15
Schroder Asian Income 262.45
Stewart Investors Asia Pacific 261.32
Asia Pacific Excluding Japan sector average 190.71

Europe Excluding UK

Fund 10 year fund performance %
BlackRock European Dynamic 332.43
Jupiter European 309.45
Invesco European Opportunities (UK) 297.79
Baillie Gifford European 265.83
TM Stonehage Fleming European All Cap 264.9
Europe excluding UK Sector average 152.47

Japan

Fund 10 year fund performance %
Legg Mason IF Japan Equity 616.57
Baillie Gifford Japanese 234.81
LF Morant Wright Nippon Yield 207.47
JPM Japan 206.11
Fidelity Japan Smaller Companies 176.48
Japan sector average 129.64

Mixed Investment 0%-35% Shares

Fund 10 year fund performance %
Janus Henderson Multi-Manager Diversified 131.3
Fidelity Multi Asset Income 113.46
Sarasin Income & Reserves 99.69
Jupiter Distribution 93.43
BM Brooks Macdonald Defensive Income 91.59
Mixed investment 0%-35% Shares sector average 66.81

Mixed Investment 20%-60% Shares

Fund 10 year fund performance %
Premier Liberation V 170.99
Premier Multi-Asset Distribution 167.3
Premier Multi-Asset Monthly Income 160.55
MI Hawksmoor Vanbrugh 154.99
Invesco Distribution (UK) 150.02
Mixed Investment 20%-60% Shares sector average 88.33

Mixed Investment 40%-85% Shares

Fund 10 year fund performance %
Baillie Gifford Managed 211.1
MFM Hathaway 201.33
Consistent Practical Investment 189.5
Liontrust Sustainable Future Managed 183.67
LF Seneca Diversified Growth 174.77
Mixed Investment 40%-85% Shares sector average 122.30

North America

Fund 10 year fund performance %
Baillie Gifford American 453.56
Merian North American Equity 394.05
UBS US Growth 392.95
Franklin US Opportunities 364.5
AXA Framlington American Growth 342.34
North America sector average 283.38

Sterling Corporate Bond

Fund 10 year fund performance %
Merian Corporate Bond 176.1
Janus Henderson Sterling Bond 174.57
Rathbone Ethical Bond 148.31
BlackRock Corporate Bond 147.18
L&G Managed Monthly Income Trust 147.15
Sterling Corporate Bond sector average 94.49

Sterling High Yield

Fund 10 year fund performance %
Invesco High Yield (UK) 228.25
Marlborough High Yield Fixed Interest 205.47
Baillie Gifford High Yield Bond 198.14
AXA Pan European High Yield Bond 177.16
AXA Global High Income 170.19
Sterling High Yield sector average 142.70

Sterling Strategic Bond

Fund 10 year fund performance %
Baillie Gifford Strategic Bond 193.65
Artemis High Income 177.04
Invesco Monthly Income Plus (UK) 163.74
Janus Henderson Fixed Interest Monthly Income 152.03
BMO Multi-Sector Bond 148.27
Sterling Strategic Bond sector average 142.70

UK All Companies

Fund 10 year fund performance %
Slater Growth 490.54
Liontrust Special Situations 428.11
Standard Life Investments UK Equity Unconstrained 419.82
Merian UK Mid Cap 364.31
Barclays UK Lower Cap 362.03
UK All Companies sector average 180.62

UK Smaller Companies

Fund 10 year fund performance %
Fidelity UK Smaller Companies 614.15
TB TB Amati UK Smaller Companies 595.38
MI The MI Discretionary Unit 583.97
Schroder UK Dynamic Smaller Companies 571.52
Liontrust UK Smaller Companies TR 545.87
UK Smaller Companies sector average 330.03

The top performing funds over 5 years

Asia Pacific Excluding Japan

Fund 5 year fund performance %
Fidelity Emerging Asia 101.29
Fidelity Asia 100.66
JPM Asia Growth 96.67
Invesco Asian (UK) 91.28
Schroder Asian Alpha Plus 88.75
Asia Pacific Excluding Japan sector average 63.42

Europe Excluding UK

Fund 5 year fund performance %
Jupiter European 74.00
Marlborough European Multi-Cap 67.47
Allianz Continental European 56.33
Fidelity European 55.53
Royal London European Growth Trust 55.31
Europe Excluding UK sector average 33.16

Japan

Fund 5 year fund performance %
Legg Mason IF Japan Equity 172.13
JPM Japan 108.61
Baillie Gifford Japanese 97.93
AXA Framlington Japan 92.43
Fidelity Japan Smaller Companies 87.12
Japan sector average 66.68

Mixed Investment 0%-35% Shares

Fund 5 year fund performance %
Royal London Sustainable Managed Growth 36.11
BlackRock NURS II Consensus 35 35.38
Vanguard LifeStrategy 20% Equity 29.22
Fidelity Multi Asset Income 28.15
LF Canlife Portfolio III 25.54
Mixed investment 0%-35% Shares sector average 17.87

Mixed Investment 20%-60% Shares

Fund 5 year fund performance %
Royal London Sustainable Diversified Trust 50.30
AXA Global Distribution 46.18
Huntress IFSL Ravenscroft Huntress Balanced 41.20
Artemis Monthly Distribution 40.41
Rathbone Active Income and Growth 40.03
Mixed Investment 20%-60% Shares sector average 22.70

Mixed Investment 40%-85% Shares

Fund 5 year fund performance %
Royal London Sustainable World Trust 78.00
Liontrust Sustainable Future Managed 58.83
Vanguard LifeStrategy 80% Equity 55.98
Zurich Horizon Multi-Asset IV 55.49
Baillie Gifford Managed 55.39
Mixed Investment 40%-85% Shares sector average 31.96

North America

Fund 5 year fund performance %
Baillie Gifford American 166.26
Investec American Franchise 125.79
UBS US Growth 124.15
AXA Framlington American Growth 115.49
Merian North American Equity 110.74
North America sector average 86.83

Sterling Corporate Bond

Fund 5 year fund performance %
BMO Long Dated Sterling Corporate Bond 49.86
Janus Henderson Inst Long Dated Credit 41.22
Schroder Sterling Corporate Bond 32.69
L&G Managed Monthly Income Trust 31.35
Royal London Corporate Bond 30.96
Sterling Corporate Bond sector average 22.52

Sterling High Yield

Fund 5 year fund performance %
Schroder High Yield Opportunities 31.94
AXA Pan European High Yield Bond 25.17
Baillie Gifford High Yield Bond 21.38
Fidelity Global High Yield 21.28
L&G High Income Trust 20.18
Sterling High Yield sector average 16.28

Sterling Strategic Bond

Fund 5 year fund performance %
Schroder SUTL Cazenove Charity Bond 31.94
AXA Framlington Managed Income 31.86
Royal London Ethical Bond 30.69
Baillie Gifford Strategic Bond 29.54
AXA Sterling Strategic Bond 29.11
Sterling Strategic Bond sector average 16.17

UK All Companies

Fund 5 year fund performance %
MFM Bowland 84.15
CFP SDL UK Buffettology 83.99
TB Evenlode Income 69.00
Liontrust Special Situations 62.78
Royal London Sustainable Leaders Trust 55.86
UK All Companies sector average 26.04

UK Smaller Companies

Fund 5 year fund performance %
TB TB Amati UK Smaller Companies 89.53
Jupiter UK Smaller Companies 83.75
Liontrust UK Smaller Companies 72.90
MI The MI Discretionary Unit 66.54
AXA Framlington UK Smaller Cos 61.53
UK Smaller Companies sector average 37.27

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.

Manager Name Fund Name Sharpe Ratio
Nigel Ashfield, Roger Skeldon Freehold Income Authorised 2.08
St Johns Asset Management Ltd St Johns High Income Property 1.36
Terry Smith Equity 1.28
Jeremy Gleeson Axa Framlington Global Technology 1.05
Keith Ashworth-Lord CFP SDL UK Buffettology 0.96
Sashi Reddy Stewart Investors Asia Pacific Leaders 0.94
Alex Gabriele, William Lock, Bruno Paulson Morgan Stanley Global Brands 0.94
Nick Greenwood LF Milton Worldwide Opportunities 0.93
Dr. Paul Jourdan, David Stevenson Amati Aim VCT Plc 0.92
Peter Bye UBS US Growth 0.88

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 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 into 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 choose 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 fund platform. Find out more about how the service works and take advantage of a 30 day FREE trial.