The best performing funds to invest in right now

17 min Read Published: 20 May 2020

The best performing funds to invest in right nowIn 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 the start of 2020). 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

The data shows the 5 and 10 year performance periods ending 20th May 2020.

Asia Pacific Excluding Japan

Fund 10 year fund performance %
Baillie Gifford Pacific 183.30
Ninety One Asia Pacific Franchise 159.10
Schroder Asian Alpha Plus 152.85
SVS BambuBlack Asia ex-Japan All-Cap 130.70
JPM Asia Growth 127.68
Average 86.44

Europe Excluding UK

Fund 10 year fund performance %
Baillie Gifford European 228.69
Jupiter European 207.12
BlackRock European Dynamic 196.80
Allianz Continental European 174.61
BlackRock Continental European 164.69
Average 93.27

Japan

Fund 10 year fund performance %
Legg Mason IF Japan Equity 654.96
Baillie Gifford Japanese 186.25
JPM Japan 172.85
AXA Framlington Japan 144.90
Fidelity Japan Smaller Companies 143.92
Average 99.14

Mixed Investment 0%-35% Shares

Fund 10 year fund performance %
Omnis Investments Ltd Omnis Managed Cautious 78.41
Sarasin Income & Reserves 69.05
Threadneedle Managed Bond Focused 58.36
Fidelity Multi Asset Income 54.55
BM Brooks Macdonald Defensive Income 54.43
Average 39.36

Mixed Investment 20%-60% Shares

Fund 10 year fund performance %
Royal London Sustainable Diversified Trust 139.53
AXA Global Distribution 90.86
Kames Ethical Cautious Managed 79.92
Omnis Investments Ltd Omnis Multi-Manager Balanced 74.53
Sarasin GlobalSar Strategic 74.53
Average 46.53

Mixed Investment 40%-85% Shares

Fund 10 year fund performance %
Royal London Sustainable World Trust 223.90
Baillie Gifford Managed 164.68
Liontrust Sustainable Future Managed 154.68
COIF Charities Investment 144.69
Thesis Climate Assets 115.04
Average 66.20

North America

Fund 10 year fund performance %
Baillie Gifford American 522.64
UBS US Growth 356.83
AXA Framlington American Growth 315.58
Franklin US Opportunities 313.43
Merian North American Equity 288.41
Average 199.25

Sterling Corporate Bond

Fund 10 year fund performance %
Janus Henderson Inst Long Dated Credit 112.95
Royal London Corporate Bond 82.45
L&G Managed Monthly Income Trust 79.80
AXA Sterling Corporate Bond 78.70
Merian Corporate Bond 77.47
Average 57.58

Sterling High Yield

Fund 10 year fund performance %
Baillie Gifford High Yield Bond 70.74
AXA Global High Income 69.31
Invesco High Yield (UK) 66.94
AXA Pan European High Yield Bond 64.50
SJP Corporate Bond 60.64
Average 48.70

Sterling Strategic Bond

Fund 10 year fund performance %
Allianz Strategic Bond 102.38
Baillie Gifford Strategic Bond 91.54
AXA Sterling Strategic Bond 83.64
Royal London Ethical Bond 83.21
Schroder SUTL Cazenove Charity Bond 81.26
Average 49.66

UK All Companies

Fund 10 year fund performance %
Slater Growth 235.56
Liontrust Special Situations 227.59
MFM Bowland 199.32
TB Evenlode Income 187.75
Royal London Sustainable Leaders Trust 183.58
Average 72.56

 

UK Smaller Companies

Fund 10 year fund performance %
Liontrust UK Smaller Companies 357.10
LF Gresham House UK Micro Cap 301.52
ES R&M UK Equity Smaller Companies 296.64
TB TB Amati UK Smaller Companies 282.23
Marlborough UK Micro Cap Growth 267.55
Average 153.07

The top-performing funds over 5 years

Asia Pacific Excluding Japan

Fund 5 year fund performance %
Baillie Gifford Pacific 78.83
Ninety One Asia Pacific Franchise 64.07
Schroder Asian Alpha Plus 60.58
SVS BambuBlack Asia ex-Japan All-Cap 68.57
JPM Asia Growth 80.19
Average 37.33

Europe Excluding UK

Fund 5 year fund performance %
Baillie Gifford European 81.54
Marlborough European Multi-Cap 62.79
Jupiter European 61.08
Allianz Continental European 57.14
BlackRock Continental European 53.48
Average 22.89

Japan

Fund 5 year fund performance %
Legg Mason IF Japan Equity 178.37
JPM Japan 91.39
AXA Framlington Japan 65.19
Baillie Gifford Japanese 64.77
Fidelity Japan Smaller Companies 60.12
Average 42.76

Mixed Investment 0%-35% Shares

Fund 5 year fund performance %
Royal London Sustainable Managed Growth Trust 33.14
BlackRock NURS II Consensus 35 29.30
Omnis Investments Ltd Omnis Managed Cautious 26.39
Vanguard LifeStrategy 20% Equity 25.78
Threadneedle Managed Bond 22.25
Average 10.75

Mixed Investment 20%-60% Shares

Fund 5 year fund performance %
Royal London Sustainable Diversified Trust 51.56
AXA Global Distribution 37.59
Liontrust Sustainable Future Defensive Managed 37.49
Embark Horizon Multi-Asset II 31.61
Huntress IFSL Ravenscroft Huntress Balanced 30.68
Average 10.74

Mixed Investment 40%-85% Shares 

Fund 5 year fund performance %
Royal London Sustainable World Trust 83.04
Baillie Gifford Managed 63.60
Liontrust Sustainable Future Managed 60.70
Liontrust Balanced 50.83
COIF Charities Investment 48.92
Average 18.08

North America

Fund 5 year fund performance %
Baillie Gifford American 251.77
UBS US Growth 133.99
Ninety One American Franchise 130.59
Artemis US Select 119.75
AXA Framlington American Growth 117.97
Average 75.54

Sterling Corporate Bond

Fund 5 year fund performance %
Janus Henderson Inst Long Dated Credit 40.18
Schroder Sterling Corporate Bond 30.44
Schroder All Maturities Corporate Bond 27.37
AXA Sterling Corporate Bond 25.98
L&G Managed Monthly Income Trust 25.81
Average 18.52

Sterling High Yield

Fund 5 year fund performance %
SJP Corporate Bond 14.16
Baillie Gifford High Yield Bond 13.99
BNY Mellon Global High Yield Bond 12.14
Schroder High Yield Opportunities 12.02
ASI High Yield Bond 11.63
Average 8.62

Sterling Strategic Bond

Fund 5 year fund performance %
Allianz Strategic Bond 42.94
Schroder SUTL Cazenove Charity Bond 32.72
AXA Sterling Strategic Bond 30.25
Barclays Sterling Bond 28.73
Royal London Ethical Bond 24.57
Average 13.19

UK All Companies

Fund 5 year fund performance %
MI Chelverton UK Equity Growth 88.32
MFM Bowland 87.76
VT The Beagle 53.69
Royal London Sustainable Leaders Trust 49.75
TB Evenlode Income 47.55
Average 1.21

UK Smaller Companies

Fund 5 year fund performance %
Liontrust UK Smaller Companies 82.54
TB TB Amati UK Smaller Companies 77.64
ASI UK Smaller Companies 68.02
FP Octopus UK Micro Cap Growth 65.09
LF Gresham House UK Micro Cap 54.60
Average 23.38