Top 10 best-performing fund groups revealed

River and Mercantile has topped the list of best equity fund management groups in FundCalibre's annual Fund Management Equity Index. The average River and Mercantile fund outperformed its peers by an impressive 51% over the past five years.

The Fund Management Equity Index looks at all actively managed equity funds recognised by the Investment Association and compares them with their sector averages over a five-year period.

It then calculates the group's average fund performance. Fund groups must have a minimum of four qualifying funds to be included in the index.

Stewart Investors came second with a 33.1% of outperformance. Unicorn, which topped the list last year, came third in this year's ranking with the firm's funds outperforming by 32%.

Style matters

The report also found that style matters: groups with more of a value bias in their investment process, which have struggled in the past few years, have had a particularly strong 12 months, due to their style of investing starting to come back into favour.

JO Hambro Capital Management (19.1% outperformance) and M&G (2.9%) are examples for such fund groups.

Those groups that specialise in asset management continue to perform better than those whose businesses span a range of financial sectors. Many retail banks - such as Halifax, HSBC and Santander - languish at the bottom of the pile.

But the loser medal went to French-owned asset manager Carmignac. The average fund, out of a total of four, has underperformed by 17.5%.

Darius McDermott, managing director of FundCalibre, comments: "At a time when cheap passive funds seem to be getting all the focus, I think it is really important to highlight that a good actively managed fund can really add value for investors.

"There are some great companies out there, from boutiques to global fund houses, which consistently outperform.

"Our index analyses the five-year performance of equity fund providers and the results show that, if you do your research, you can find some very good actively managed funds that repeatedly do well for their investors.

"Consistently good active management is not a myth. Six groups have been in our top 10 in the past three years, each in turn demonstrating outperformance over rolling five-year periods. This suggests a high degree of skill among their fund management teams."

This article was originally published in our sister magazine Money Observer. Click here to subscribe.