The number of UK mid-cap funds achieving top-quartile returns over three years rose significantly in the first quarter of 2013, F&C Investments research has revealed.
It found that 4.56 per cent of mid-cap funds in the 12 main IMA sectors were top-quartile in each of the past three 12-month periods. In the final quarter of 2012, 2.78 per cent of mid-cap funds achieved this - with the long-run average sitting between 2 and 5 per cent.
UK funds were the main driver of top-quartile performing funds, with the total number of consistent funds (those delivering steady outperformance) up twice as much as the previous quarter, with mid-caps driving the majority of the increase.
The IMA UK All-Companies and IMA UK Index-Linked Gilt sectors replaced the previous quarter's best-performing UK equity and bond sectors, returning 10.89 per cent and 7.52 per cent, respectively.
Conversely, the IMA £ Strategic Bond sector had no consistent funds, with the IMA Global Bond, North American and UK Smaller Companies sectors only having one consistent fund each.
Gary Potter, co-head of multi-manager at F&C Investments, said there is reason for investors to be optimistic because the number of top-quartile funds is on the increase and all 36 IMA sectors made money. He said: "While generating returns in today's markets is no easy task, some of the individual sector and fund performances suggests that attractive returns are there to be found, particularly if you're willing to take a little more risk.
"The returns we have seen from Japanese small caps come as no surprise given recent macro-developments, and for this reason we are currently overweight Japan. Meanwhile, the role of UK mid-cap mandates in driving a significant jump in the number of funds reaching top-quartile returns reaffirms our belief that small and mid-cap managers are offering attractive returns in today's market. In the first quarter of this year, the IMA UK Smaller Companies returned over 10 per cent, which is compelling in the current market environment."
