There is an enormous body of research that shows most active funds struggle to deliver consistent outperformance . For example , a recent study from Quilter Cheviot found that just 12 out of 212 active UK All Companies funds outperformed in each of the past five years . One of the major reasons for this is that many managers tend to favour a certain type of strategy , which will go in and out of fashion depending on where we are in the market cycle . It is difficult for a manager to outperform when their method of investing falls out of favour – yet a small number have been able to do this over extended periods . Here are three that have made the grade .
For unpopular investment styles over the past decade , look no further than value investing . Rory Maguire , managing director at Fundhouse , describes the strategy employed by most value managers as “ a real feast or famine approach ”, as there are few moments where they can buy genuinely cheap stocks or avoid very expensive ones . “ Their excess returns come in a very lumpy fashion compared , say , with a quality manager like Terry Smith ,” he says . Yet some value funds have managed to consistently outperform in the prolonged bull run of the past decade , with the task made easier if they operate towards the lower end of the market-cap spectrum . Jonathan Winton ( pictured ) of the
Fidelity UK Smaller Companies fund is one example . He says a lack of research in this area means many companies trade below their true value – particularly those that
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