17 min Read
18 Jun 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 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 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. 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. However, his new flagship Woodford Equity Income fund (which he launched in 2014) has been performing so badly since June 2017 (down -6.25% versus an average profit of 31.23% for his peers) that investors were withdrawing money at the rate of £10m a day in May 2019. The fund has since been closed, for a minimum of 28 days, trapping billions of pounds of investors money in the underperforming fund.

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 %
Schroder Asian Alpha Plus 260.86
Baillie Gifford Pacific 249.48
Schroder Asian Income 242.29
BNY Mellon Asian Income 236.96
Stewart Investors Asia Pacific 236.82
Average 164.43

Europe Excluding UK

Fund 10 year fund performance %
Jupiter European 327.26
BlackRock European Dynamic 320.30
Baillie Gifford European 278.07
TM Stonehage Fleming European All Cap Equity 247.74
BlackRock Continental European 247.46
Average 158.51

Japan

Fund 10 year fund performance %
Legg Mason IF Japan Equity 626.61
Baillie Gifford Japanese 252.21
JPM Japan 202.41
LF Morant Wright Nippon Yield 198.31
AXA Framlington Japan 179.89
Average 131.98

Mixed Investment 0%-35% Shares

Fund 10 year fund performance %
Fidelity Multi Asset Income 96.03
Sarasin Income & Reserves 92.71
Janus Henderson Multi-Manager Diversified 90.59
BM Brooks Macdonald Defensive Income 86.41
Jupiter Distribution 82.44
Average 62.88

Mixed Investment 20%-60% Shares

Fund 10 year fund performance %
Premier Multi-Asset Distribution 145.34
Premier Liberation V 140.79
Premier Multi-Asset Monthly Income 139.41
AXA Global Distribution 137.58
Invesco European High Income (UK) 137.37
Average 80.48

Mixed Investment 40%-85% Shares

Fund 10 year fund performance %
Baillie Gifford Managed 221.01
MFM Hathaway 189.66
Liontrust Sustainable Future Managed 187.45
Consistent Practical Investment 172.97
Lazard Managed Balanced 163.72
Average 113.38

North America

Fund 10 year fund performance %
Baillie Gifford American 538.76
UBS US Growth 442.76
Merian North American Equity 437.88
Franklin US Opportunities 409.40
AXA Framlington American Growth 406.26
Average 306.14

Sterling Corporate Bond

Fund 10 year fund performance %
Merian Corporate Bond 128.70
BlackRock Corporate Bond 127.33
Janus Henderson Sterling Bond 125.61
Rathbone Ethical Bond 121.14
Royal London Corporate Bond 120.92
Average 82.31

Sterling High Yield

Fund 10 year fund performance %
Invesco High Yield (UK) 152.45
Baillie Gifford High Yield Bond 148.59
AXA Pan European High Yield Bond 132.11
AXA Global High Income 129.57
Marlborough High Yield Fixed Interest 123.19
Average 101.47

Sterling Strategic Bond

Fund 10 year fund performance %
Baillie Gifford Strategic Bond 152.60
Artemis High Income 141.51
Invesco Monthly Income Plus (UK) 120.00
Royal London Ethical Bond 117.32
Janus Henderson Fixed Interest Monthly Income 112.84
Average 79.74

UK All Companies

Fund 10 year fund performance %
Slater Growth 499.19
Liontrust Special Situations 394.61
Merian UK Mid Cap 338.89
Franklin UK Mid Cap 323.22
Royal London UK Mid-Cap Growth 317.21
Average 158.85

UK Smaller Companies

Fund 10 year fund performance %
TB TB Amati UK Smaller Companies 495.53
MI The MI Discretionary Unit 493.23
Fidelity UK Smaller Companies 490.58
Liontrust UK Smaller Companies 470.71
Schroder UK Dynamic Smaller Companies 440.02
Average 274.49

The top-performing funds over 5 years

Asia Pacific Excluding Japan

Fund 5 year fund performance %
JPM Asia Growth 94.11
Fidelity Emerging Asia 93.38
Fidelity Asia 92.67
Fidelity Asian Dividend 90.45
Smith & Williamson Oriental Growth 83.47
Average 61.59

Europe Excluding UK

Fund 5 year fund performance %
Jupiter European 91.26
Marlborough European Multi-Cap 79.14
BlackRock European Dynamic 68.59
Allianz Continental European 67.90
Royal London European Growth Trust 67.57
Average 43.02

Japan

Fund 5 year fund performance %
Legg Mason IF Japan Equity 179.56
JPM Japan 116.61
Baillie Gifford Japanese 99.01
Jupiter Japan Income 87.29
AXA Framlington Japan 85.65
Average 69.96

Mixed Investment 0%-35% Shares

Fund 5 year fund performance %
Royal London Sustainable Managed Growth Trust 38.48
BlackRock NURS II Consensus 35 37.43
Vanguard LifeStrategy 20% Equity 30.58
LF Canlife Portfolio III 28.43
Sarasin Income & Reserves 25.98
Average 19.08

Mixed Investment 20%-60% Shares

Fund 5 year fund performance %
Royal London Sustainable Diversified Trust 56.73
AXA Global Distribution 49.23
Zurich Horizon Multi-Asset II 44.39
Huntress IFSL Ravenscroft Huntress Balanced 43.88
Rathbone Active Income and Growth 42.02
Average 24.07

Mixed Investment 40%-85% Shares

Fund 5 year fund performance %
Royal London Sustainable World Trust 91.06
Liontrust Sustainable Future Managed 69.48
Baillie Gifford Managed 64.00
Newton Growth and Income For Charities 62.02
Zurich Horizon Multi-Asset IV 61.50
Average 35.02

North America

Fund 5 year fund performance %
Baillie Gifford American 192.05
Investec American Franchise 141.87
UBS US Growth 139.64
AXA Framlington American Growth 135.97
Franklin US Opportunities 128.20
Average 101.66

Sterling Corporate Bond

Fund 5 year fund performance %
Janus Henderson Inst Long Dated Credit 40.77
Schroder Sterling Corporate Bond 33.14
L&G Managed Monthly Income Trust 31.38
Royal London Corporate Bond 31.31
Royal London Sterling Credit 31.11
Average 22.90

Sterling High Yield

Fund 5 year fund performance %
Schroder High Yield Opportunities 28.79
AXA Pan European High Yield Bond 24.15
Baillie Gifford High Yield Bond 21.64
Fidelity Global High Yield 20.87
Aberdeen European High Yield Bond 19.01
Average 15.54

Sterling Strategic Bond

Fund 5 year fund performance %
Schroder SUTL Cazenove Charity Bond 32.62
Royal London Ethical Bond 31.10
AXA Framlington Managed Income 29.76
AXA Sterling Strategic Bond 29.46
NFU Mutual Gilt & Corporate Bond 29.33
Average 16.05

UK All Companies

Fund 5 year fund performance %
MFM Bowland 104.18
CFP SDL UK Buffettology 102.56
TB Evenlode Income 79.39
Merian UK Mid Cap 73.84
Liontrust Special Situations 71.94
Average 32.20

UK Smaller Companies

Fund 5 year fund performance %
TB TB Amati UK Smaller Companies 107.31
Jupiter UK Smaller Companies 100.34
Standard Life Investments UK Smaller Companies 97.01
Liontrust UK Smaller Companies 90.69
Invesco UK Smaller Companies Equity (UK) 84.01
Average 52.04