Fund research company FE has put together a list of the best-performing UK equity funds from the UK Equity Income and UK All Companies fund sectors, and found that the winners include a number of mid-cap funds.
The best-performing funds over the three years to 1 June this year are Neptune UK Mid-Cap (GB00B3D7FD61), followed by Old Mutual UK Dynamic Equity (IE00B60CZM49) and IC fund tip Cazenove UK Opportunities (GB0031092728). All of these funds nearly doubled investors' money over the past three years.
Read our December 2012 tip on Cazenove UK Opportunities
Read our January 2013 interview with Cazenove UK Opportunities’ manager Julie Dean
The best performers over the past decade are Franklin UK Mid Cap (GB00B6ZVYF25), followed by Old Mutual UK Mid Cap (GB00B1XG7999) and Schroder Recovery (GB0007893760).
"In recent years, specialist mid-cap managers have outshone most other funds within the UK All Companies sector," said Pascal Dowling, head of publishing content at FE Trustnet. "Mid-cap stocks tend to do well in periods of economic growth and are much more correlated to the domestic economy than larger or mega-cap corporations with global customer bases. Despite the current malaise, the UK has arguably enjoyed a strong decade. Whether investors should pile in at this point, though, depends on their expectations for the next 10 years."
Best-performing UK equity funds over three years
| Fund | 3-year total returns to 1 June 2013 (%) |
Neptune - UK Mid Cap | 95.04 |
Old Mutual UK Dynamic Equity | 92.59 |
Cazenove UK Opportunities | 91.78 |
Source: FE
Best performers over the last decade
Fund | 10-year total returns to 1 June 2013 (%) |
Franklin UK Mid Cap | 427.36 |
Old Mutual UK Mid Cap | 371.52 |
Schroder Recovery | 273.97 |
Source: FE
The third best fund for risk adjusted returns, meanwhile, was also Neptune UK Mid Cap, after IC Top 100 Funds Unicorn UK Income (GB00B00Z1S94) and Liontrust Special Situations (GB00B0N6YF70).
"All three of these funds invest in highly volatile sectors, making their high risk adjusted returns particularly impressive," explained Mr Dowling. "Neptune UK Mid Cap has managed to beat its mid-cap peers largely by protecting against the downside. The fund's manager Mark Martin's value style gives him an advantage in down markets, where value stocks tend to outperform. Meanwhile, he is careful to avoid the sort of cyclical stocks that lead the pack in inflationary markets, but are more risky in the medium term."
Last week, we reported that the number of UK mid-cap funds achieving top-quartile returns over three years rose significantly in the first quarter of 2013 (read the report), while in April we reported that a number of smaller company investment trusts are doing well due to their exposure to mid caps (read more on this).
