17 min Read
29 Jan 2020

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 list 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 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 next section of this article emphasises the impact on your returns of your misplaced loyalty to even the best fund managers. Just look at Neil Woodford's fall from grace, who until recently was touted as 'an investment guru' by the national press, for a powerful example of misplaced loyalty. 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 Fund name Sharpe ratio
Nigel Ashfield / Roger Skeldon Freehold Income Authorised 2.13
David Stevenson / Dr. Paul Jourdan TB Amati UK Smaller Companies 1.46
Hargreave Hale MFM Bowland 1.44
Keith Ashworth-Lord CFP SDL UK Buffettology 1.42
Harry Nimmo ASI UK Smaller Companies 1.25
Anthony Cross / Julian Fosh Liontrust UK Smaller Companies / Liontrust Special Situations / Liontrust UK Growth / Liontrust UK Micro Cap 1.18
David Walton Marlborough European Multi-Cap 1.15
Mark Niznik Artemis UK Smaller Companies 1.15
Terry Smith Fundsmith Equity 1.11
Jeremy Gleeson AXA Framlington Global Technology 1.08

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. Interestingly, Neil Woodford was the manager at Invesco Perpetual High Income and Income funds until 2014 when he left to set up his own asset management company, Woodford Investment Management. However, his flagship Woodford Equity Income fund (which he launched in 2014) underperformed its peers so badly that the fund was closed in 2019 and his entire investment empire closed down, trapping around £3billion of investors' money in underperforming funds.

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.

The top-performing funds over 5 years and 10 years

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 explained earlier. 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 %
Baillie Gifford Pacific 212.83
Schroder Asian Alpha Plus 203.55
Investec Asia Pacific Franchise 200.26
Schroder Asian Income 177.91
Fidelity Asia 176.76
Average 194.26

Europe Excluding UK

Fund
10 year fund performance %
Jupiter European 258.27
BlackRock European Dynamic 247.02
Baillie Gifford European 232.55
BlackRock Continental European 195.19
TM CRUX European Special Situations 194.96
Average 225.60

Japan

Fund
10 year fund performance %
Legg Mason IF Japan Equity 623.27
Baillie Gifford Japanese 228.32
LF Morant Wright Nippon Yield 202.72
JPM Japan 181.93
Fidelity Japan Smaller Companies 177.22
Average 282.69

Mixed Investment 0%-35% Shares

Fund
10 year fund performance %
Omnis Investments Ltd Omnis Managed Cautious 92.01
Sarasin Income & Reserves 77.78
Fidelity Multi Asset Income 75.93
AXA Defensive Distribution 67.80
L&G Mixed Investment 0-35% 67.46
Average 76.20

Mixed Investment 20%-60% Shares

Fund
10 year fund performance %
Royal London Sustainable Diversified Trust 159.49
Premier Multi-Asset Distribution 110.86
AXA Ethical Distribution 109.96
Kames Ethical Cautious Managed 109.34
Premier Multi-Asset Monthly Income 105.79
Average 119.09

Mixed Investment 40%-85% Shares

Fund
10 year fund performance %
Royal London Sustainable World Trust 251.79
Baillie Gifford Managed 178.64
MFM Hathaway 172.72
Liontrust Sustainable Future Managed 172.41
Consistent Practical Investment 155.70
Average 186.25

North America

Fund
10 year fund performance %
Baillie Gifford American 468.50
UBS US Growth 393.07
Merian North American Equity 373.08
Franklin US Opportunities 342.41
AXA Framlington American Growth 338.30
Average 383.07

Sterling Corporate Bond

Fund
10 year fund performance %
Janus Henderson Inst Long Dated Credit 120.16
Royal London Corporate Bond 97.23
L&G Managed Monthly Income Trust 92.56
Schroder Sterling Corporate Bond 91.47
Baillie Gifford Investment Grade Bond 89.70
Average 98.22

Sterling High Yield

Fund
10 year fund performance %
Invesco High Yield (UK) 111.31
Baillie Gifford High Yield Bond 101.97
AXA Pan European High Yield Bond 95.26
AXA Global High Income 90.90
Schroder High Yield Opportunities 81.91
Average 96.27

Sterling Strategic Bond

Fund
10 year fund performance %
Baillie Gifford Strategic Bond 116.44
Artemis High Income 100.90
Royal London Ethical Bond 95.93
Fidelity Extra Income 83.09
Invesco Monthly Income Plus (UK) 82.46
Average 95.76

UK All Companies

Fund
10 year fund performance %
Slater Growth 345.53
Merian UK Mid Cap 318.91
Liontrust Special Situations 304.19
Barclays UK Lower Cap 293.70
Franklin UK Mid Cap 287.64
Average 309.99

UK Smaller Companies

Fund
10 year fund performance %
Liontrust UK Smaller Companies 409.97
TB TB Amati UK Smaller Companies 407.49
LF Gresham House UK Micro Cap 404.68
MI The MI Discretionary Unit 392.29
ASI UK Smaller Companies 380.07
Average 398.90

The top-performing funds over 5 years

Asia Pacific Excluding Japan

Fund
5 year fund performance %
Fidelity Asia Pacific Opportunities 101.73
JPM Asia Growth 88.16
Fidelity Asia 80.25
SVS BambuBlack Asia ex-Japan All-Cap 76.57
Fidelity Asian Dividend 71.59
Average 83.66

Europe Excluding UK

Fund
5 year fund performance %
Marlborough European Multi-Cap 120.34
Baillie Gifford European 96.97
Jupiter European 92.63
BlackRock European Dynamic 86.72
BlackRock Continental European 82.69
Average 95.87

Japan

Fund
5 year fund performance %
Legg Mason IF Japan Equity 172.55
JPM Japan 94.71
Baillie Gifford Japanese 92.27
Jupiter Japan Income 85.68
AXA Framlington Japan 82.87
Average 105.62

Mixed Investment 0%-35% Shares

Fund
5 year fund performance %
Royal London Sustainable Managed Growth Trust 34.65
Omnis Investments Ltd Omnis Managed Cautious 34.26
BlackRock NURS II Consensus 35 31.65
EF Brompton Global Conservative 26.23
Vanguard LifeStrategy 20% Equity 25.79
Average 30.52

Mixed Investment 20%-60% Shares

Fund
5 year fund performance %
Royal London Sustainable Diversified Trust 57.43
Liontrust Sustainable Future Defensive Managed 44.57
Artemis Monthly Distribution 41.78
Rathbone Active Income and Growth Fund 41.61
Zurich Horizon Multi-Asset II 41.40
Average 45.36

Mixed Investment 40%-85% Shares 

Fund
5 year fund performance %
Royal London Sustainable World Trust 88.87
Liontrust Sustainable Future Managed 72.69
Baillie Gifford Managed 69.16
MFM Hathaway 64.97
Zurich Horizon Multi-Asset IV 59.80
Average 71.10

North America

Fund
5 year fund performance %
Baillie Gifford American 172.31
UBS US Growth 131.65
Investec American Franchise 123.01
Artemis US Extended Alpha 121.30
Artemis US Select 119.44
Average 133.54

Sterling Corporate Bond

Fund
5 year fund performance %
Janus Henderson Inst Long Dated Credit 34.81
Schroder Sterling Corporate Bond 33.26
Liontrust Sustainable Future Corporate Bond 27.83
L&G Managed Monthly Income Trust 27.43
AXA Sterling Corporate Bond 27.28
Average 30.12

Sterling High Yield

Fund
5 year fund performance %
Schroder High Yield Opportunities 38.05
Fidelity Global High Yield 33.05
Baillie Gifford High Yield Bond 30.71
L&G High Income Trust 30.28
AXA Pan European High Yield Bond 29.99
Average 32.42

Sterling Strategic Bond

Fund
5 year fund performance %
GAM Credit Opportunities GBP 39.96
Baillie Gifford Strategic Bond 29.16
AXA Framlington Managed Income 28.29
Royal London Ethical Bond 26.32
Artemis High Income 26.14
Average 29.97

UK All Companies

Fund
5 year fund performance %
MI Chelverton UK Equity Growth 158.10
MFM Bowland 124.15
Unicorn UK Growth 86.06
Slater Recovery 83.31
Baillie Gifford UK Equity Alpha 82.72
Average 106.87

UK Smaller Companies

Fund
5 year fund performance %
TB TB Amati UK Smaller Companies 138.15
ASI UK Smaller Companies 127.98
Liontrust UK Smaller Companies 122.74
Jupiter UK Smaller Companies 120.73
MI The MI Discretionary Unit 110.44
Average 124.01