17 min Read
03 Sep 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 (up to June 2019). 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 223.68
Baillie Gifford Pacific 223.09
Investec Asia Pacific Franchise 208.98
BNY Mellon Asian Income 201.12
Schroder Asian Income 198.76
Average 211.13

Europe Excluding UK

Fund 10 year fund performance %
Jupiter European 289.62
BlackRock European Dynamic 240.24
Baillie Gifford European 217.34
BlackRock Continental European 188.08
Allianz Continental European 178.44
Average 222.74

Japan

Fund 10 year fund performance %
Legg Mason IF Japan Equity 626.09
Baillie Gifford Japanese 228.42
JPM Japan 182.75
LF Morant Wright Nippon Yield 176.96
Fidelity Japan Smaller Companies 164.08
Average 275.66

Mixed Investment 0%-35% Shares

Fund 10 year fund performance %
Sarasin Income & Reserves 85.19
Fidelity Multi Asset Income 81.48
BM Brooks Macdonald Defensive Income 74.03
AXA Defensive Distribution 72.53
L&G Mixed Investment 0-35% 71.39
Average 76.92

Mixed Investment 20%-60% Shares

Fund 10 year fund performance %
Royal London Sustainable Diversified Trust 152.99
Premier Multi-Asset Distribution 118.93
Premier Multi-Asset Monthly Income 112.23
AXA Global Distribution 110.73
Premier Liberation V 110.59
Average 121.09

Mixed Investment 40%-85% Shares

Fund 10 year fund performance %
Baillie Gifford Managed 188.03
Liontrust Sustainable Future Managed 165.13
MFM Hathaway 162.2
McInroy & Wood Balanced 147.01
Consistent Practical Investment 143.34
Average 161.14

North America

Fund 10 year fund performance %
Baillie Gifford American 494.74
UBS US Growth 425.43
Merian North American Equity 389.89
Franklin US Opportunities 387.71
AXA Framlington American Growth 351.69
Average 409.89

Sterling Corporate Bond

Fund 10 year fund performance %
Rathbone Ethical Bond 109.56
Royal London Corporate Bond 106.58
BlackRock Corporate Bond 106.33
L&G Managed Monthly Income Trust ** 102.76
Merian Corporate Bond 101.02
Average 105.25

Sterling High Yield

Fund 10 year fund performance %
Invesco High Yield (UK) 128.51
Baillie Gifford High Yield Bond 127.85
AXA Pan European High Yield Bond 114.27
AXA Global High Income 113.85
Kames High Yield Bond 95.77
Average 116.05

Sterling Strategic Bond

Fund 10 year fund performance %
Baillie Gifford Strategic Bond 134.46
Artemis High Income 117.38
Royal London Ethical Bond 105.14
Invesco Monthly Income Plus (UK) 100.84
Fidelity Extra Income 96.67
Average 110.90

UK All Companies

Fund 10 year fund performance %
Slater Growth 429.06
Liontrust Special Situations 335.52
Merian UK Mid Cap 265.5
Franklin UK Mid Cap 258.62
Royal London UK Mid-Cap Growth 257.82
Average 309.30

UK Smaller Companies

Fund 10 year fund performance %
TB TB Amati UK Smaller Companies 417.98
Liontrust UK Smaller Companies 408.7
Fidelity UK Smaller Companies 392.24
Marlborough UK Micro Cap Growth 363.01
MI The MI Discretionary Unit 354.63
Average 387.31

The top-performing funds over 5 years

Asia Pacific Excluding Japan

Fund 5 year fund performance %
JPM Asia Growth 89.07
Fidelity Asia 88.38
Fidelity Emerging Asia 87.18
Fidelity Asian Dividend 83.75
Barings Eastern Trust 76.81
Average 85.04

Europe Excluding UK

Fund 5 year fund performance %
Jupiter European 104.01
Marlborough European Multi-Cap 90.49
BlackRock European Dynamic 84.23
Royal London European Growth Trust 80.96
BlackRock Continental European 78.49
Average 87.64

Japan

Fund 5 year fund performance %
Legg Mason IF Japan Equity 172.27
JPM Japan 118.47
Baillie Gifford Japanese 99.88
Jupiter Japan Income 94.38
Fidelity Japan Smaller Companies 84.04
Average 113.81

Mixed Investment 0%-35% Shares

Fund 5 year fund performance %
Royal London Sustainable Managed Growth Trust 39.65
BlackRock NURS II Consensus 35 38.54
Vanguard LifeStrategy 20% Equity 31.85
LF Canlife Portfolio III 28.57
Sarasin Income & Reserves 27.98
Average 33.32

Mixed Investment 20%-60% Shares

Fund 5 year fund performance %
Royal London Sustainable Diversified Trust 59.23
Liontrust Sustainable Future Defensive Managed 46.35
Zurich Horizon Multi-Asset II 46.03
AXA Global Distribution 44.36
Artemis Monthly Distribution 43.11
Average 47.82

Mixed Investment 40%-85% Shares

Fund 5 year fund performance %
Royal London Sustainable World Trust 94.03
Liontrust Sustainable Future Managed 69.07
Baillie Gifford Managed 65.26
Newton Growth and Income For Charities 62.81
Zurich Horizon Multi-Asset IV 60.93
Average 70.42

North America

Fund 5 year fund performance %
Baillie Gifford American 198.07
Investec American Franchise 151.45
UBS US Growth 137.63
Franklin US Opportunities 125.6
M&G North American Dividend 120.75
Average 146.70

Sterling Corporate Bond

Fund 5 year fund performance %
Schroder Sterling Corporate Bond 35.13
L&G Managed Monthly Income Trust 32.99
Royal London Sterling Credit 31.75
Royal London Corporate Bond 31.58
L&G Fixed Interest Trust 31.22
Average 32.53

Sterling High Yield

Fund 5 year fund performance %
Schroder High Yield Opportunities 28.95
AXA Pan European High Yield Bond 27.38
Baillie Gifford High Yield Bond 24.05
ASI European High Yield Bond 22.11
ASI High Yield Bond 21.66
Average 24.83

Sterling Strategic Bond

Fund 5 year fund performance %
Schroder SUTL Cazenove Charity Bond 34.11
Royal London Ethical Bond 31.33
Baillie Gifford Strategic Bond 31.12
AXA Sterling Strategic Bond 30.27
Barclays Sterling Bond 29.95
Average 31.36

UK All Companies

Fund 5 year fund performance %
MFM Bowland 105.63
TB Evenlode Income 85.17
Royal London Sustainable Leaders Trust 71.91
Liontrust Special Situations 67.07
Merian UK Mid Cap 65.84
Average 79.12

UK Smaller Companies

Fund 5 year fund performance %
TB TB Amati UK Smaller Companies 100.52
Liontrust UK Smaller Companies 90.82
Jupiter UK Smaller Companies 90.63
ASI UK Smaller Companies 84.33
Invesco UK Smaller Companies Equity (UK) 79.78
Average 89.22