17 min Read
27 Nov 2018

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. 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 %
Schroder Asian Alpha Plus 438.25
Baillie Gifford Pacific 386.02
Invesco Asian (UK) 337.9
Schroder Asian Income 329.29
Stewart Investors Asia Pacific 324.55
 Asia Pacific Excluding Japan sector average 234.52

Europe excluding UK

Fund 10 year fund performance %
Jupiter European 353.27
Invesco European Opportunities (UK) 334.96
BlackRock European Dynamic 324.7
Stonehage Fleming European All Cap Equity 284.57
Baillie Gifford European 279.85
 Europe Excluding UK sector average 157.86

Japan

Fund 10 year fund performance %
Legg Mason IF Japan Equity 574.58
Baillie Gifford Japanese 252.81
M&G Japan 198.12
Fidelity Japan Smaller Companies 189.42
JPM Japan 181.48
 Europe Excluding UK sector average 157.86

Mixed Investment 0%-35% Shares

Fund 10 year fund performance %
Fidelity Multi Asset Income 105.72
BM Brooks Macdonald Defensive Income 86.97
Jupiter Distribution 84.47
Sarasin Income & Reserves 84.12
Janus Henderson Multi-Manager Diversified 81.35
 Mixed Investment 0-35% Shares sector average 63.52

Mixed Investment 20%-60% Shares

Fund 10 year fund performance %
Invesco European High Income (UK) 158.33
Premier Liberation V 151.4
Premier Multi-Asset Distribution 147.21
AXA Ethical Distribution 136.74
AXA Global Distribution 130.44
 Mixed Investment 20-60% Shares sector average 80.79

Mixed Investment 40%-85% Shares

Fund 10 year fund performance %
Baillie Gifford Managed 211.82
Rathbone Sussex Growth 192.26
MFM Hathaway 182.98
Consistent Practical Investment 180.83
Liontrust Sustainable Future Managed 171.11
 Mixed Investment 40-85% Shares sector average 117.3

North America

Fund 10 year fund performance %
Baillie Gifford American 430.57
UBS US Growth 415.86
M&G North American Value 397.73
Merian North American Equity 388
SJP North American 382.53
 North America sector average 288.55

Sterling Corporate Bond

Fund 10 year fund performance %
Merian Corporate Bond 123.01
Aberdeen Sterling Long Dated Corporate Bond 119.29
L&G Managed Monthly Income Trust 118.46
BlackRock Corporate Bond 115.01
UBS Corporate Bond UK Plus 109.51
 Sterling Corporate Bond sector average 78.17

Sterling High Yield

Fund 10 year fund performance %
Baillie Gifford High Yield Bond 183.04
AXA Global High Income 179.78
Marlborough High Yield Fixed Interest 167.86
Aviva Inv High Yield Bond 156.44
Kames High Yield Bond 151.64
 Sterling High Yield sector average 133.46

Sterling Strategic Bond

Fund 10 year fund performance %
Invesco Monthly Income Plus (UK) 145.15
Artemis High Income 142.76
Baillie Gifford Strategic Bond 141.24
Jupiter Strategic Bond 135.23
Aviva Inv Managed High Income 120.53
 Sterling Strategic Bond sector average 83.17

UK All Companies

Fund 10 year fund performance %
Slater Growth 502.66
Standard Life Investments UK Equity Unconstrained 474.59
Liontrust Special Situations 427.53
SVM UK Opportunities 419.32
Merian UK Mid Cap 397.1
 UK All Companies sector average 174.21

UK Smaller Companies

Fund 10 year fund performance %
Fidelity UK Smaller Companies 701.4
TB TB Amati UK Smaller Companies 595.84
Marlborough UK Micro Cap Growth 574.32
Schroder UK Dynamic Smaller Companies 527.77
Liontrust UK Smaller Companies 510.65
 UK Smaller Companies sector average 336.78

The top performing funds over 5 years

Asia Pacific Excluding Japan

Fund 5 year fund performance %
Fidelity Emerging Asia 86.87
Invesco Asian (UK) 75.81
JPM Asia Growth 74.43
Fidelity Asia 73.72
Merian Asia Pacific 72.76
 Asia Pacific Excluding Japan sector average 50.51

Europe Excluding UK

Fund 5 year fund performance %
Marlborough European Multi-Cap 84.69
Jupiter European 77.47
BlackRock European Dynamic 55.71
Baillie Gifford European 55.71
Royal London European Growth Trust 55.64
 Europe Excluding UK sector average 36.87

Japan

Fund 5 year fund performance %
Legg Mason IF Japan Equity 143.76
AXA Framlington Japan 88.64
LF Morant Wright Nippon Yield 80.26
Baillie Gifford Japanese 79.83
Fidelity Japan Smaller Companies 77.26
 Japan sector average 57.3

Mixed Investment 0%-35% Shares

Fund 5 year fund performance %
Royal London Sustainable Managed Growth Trust 32.43
BlackRock NURS II Consensus 35 30.25
Fidelity Multi Asset Income 25.26
Vanguard LifeStrategy 20% Equity 24.69
Sarasin Income & Reserves 22.75
 Mixed Investment 0-35% Shares sector average 15.97

Mixed Investment 20%-60% Shares

Fund 5 year fund performance %
Artemis Monthly Distribution 44.95
Royal London Sustainable Diversified Trust 43.84
AXA Global Distribution 41.12
Rathbone Active Income and Growth 36.77
Premier Liberation V 35.73
 Mixed Investment 20-60% Shares sector average 20.82

Mixed Investment 40%-85% Shares

Fund 5 year fund performance %
Royal London Sustainable World Trust 67.66
Liontrust Sustainable Future Managed 52.16
Orbis Global Balanced 51.51
Baillie Gifford Managed 51.4
Vanguard LifeStrategy 80% Equity 50.35
 Mixed Investment 40-85% Shares sector average 29.21

North America

Fund 5 year fund performance %
Baillie Gifford American 142.66
Investec American Franchise 111.31
UBS US Growth 107.27
BlackRock US Dynamic 101.95
Merian North American Equity 101.86
 North America sector average 84.39

Sterling Corporate Bond

Fund 5 year fund performance %
BMO Long Dated Sterling Corporate Bond 40.66
Aberdeen Sterling Long Dated Corporate Bond 31.07
Janus Henderson Inst Long Dated Credit 30.28
Royal London Sterling Credit 28.16
Royal London Corporate Bond 28.12
 Sterling Corporate Bond sector average 19.71

Sterling High Yield

Fund 5 year fund performance %
Schroder High Yield Opportunities 33.45
AXA Pan European High Yield Bond 25.68
Baillie Gifford High Yield Bond 21.49
Aberdeen European High Yield Bond 21.27
Standard Life Investments Higher Income 21.04
 Sterling High Yield sector average 15.85

Sterling Strategic Bond

Fund 5 year fund performance %
AXA Framlington Managed Income 33.33
Royal London Ethical Bond 28.6
Baillie Gifford Strategic Bond 27.75
Schroder SUTL Cazenove Charity Bond 26.61
Royal London Sustainable Managed Income Trust 25.64
 Sterling Strategic Bond sector average 14.99

UK All Companies

Fund 5 year fund performance %
MFM Bowland 107.95
CFP SDL UK Buffettology 88.84
Slater Recovery 68.34
Merian UK Mid Cap 67.56
TB Evenlode Income 65.94
 UK All Companies sector average 27.74

UK Smaller Companies

Fund 5 year fund performance %
TB TB Amati UK Smaller Companies 106.88
Jupiter UK Smaller Companies 94.01
Liontrust UK Smaller Companies 93.8
LF Livingbridge UK Micro Cap 90.28
Discretionary Unit Fund Mgrs Ltd The MI Discretionary Unit 84.68
 UK Smaller Companies sector average 49.67

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. Interestingly one of the funds is a tracker fund by Vanguard (with no human fund manager).

Manager Name Fund Name Sharpe Ratio
Nigel Ashfield, Roger Skeldon Freehold Income Authorised 5.84
Philip Gadsden Property 1.73
Michael Barrie, Matt Jarvis UK Property 1.66
St Johns Asset Management Ltd St Johns High Income Property 1.53
Terry Smith Equity 1.41
Hargreave Hale Bowland 1.28
LGIM Index Fund Management Team Global Technology Index Trust 1.25
Vanguard Equity Index Group US Equity Index 1.22
Ken Wotton Livingbridge UK Micro Cap 1.16
Michael Hayward Investec - American Franchise 1.16

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.