- In our analysis of the 349 funds in the UK equity market, 53 managed to receive a top performing 4 or 5 star rating.
- Artemis UK Select fund has achieved the highest growth return in the UK All Companies sector over the past 5 years. The fund returned growth of 84.54% compared to the sector average of 28.67%.
- 220 of the 349 funds analysed received a poor performing 1 or 2 star performance rating.
- UK Equity funds were among the most sold off funds over the past several years but recent strong performance has seen a resurgence in investment. Since 2021, the total invested in UK Equity funds has risen from £140 billion to £220 billion.
Following the 2016 Brexit referendum, UK equity funds experienced a significant decline in assets under management. The value fell from £300 billion to £140 billion by 2021, driven by substantial investor withdrawals and declining market values during the COVID-19 pandemic.
However, since the 2021 low point, UK equities have demonstrated a notable recovery in performance. This upturn has attracted investors back to the asset class, resulting in a substantial increase in assets under management. As of July 2024, UK equity funds now manage in excess of £220 billion.
In this article, we focus on identifying the top-performing UK equity funds. We highlight 10 funds that have consistently ranked among the best performing funds over the past 1, 3, and 5 years. This information aims to assist investors in making informed decisions when selecting UK equity funds for their portfolios.
UK Equity Fund Performance Summary
The UK equity fund market is highly competitive, comprising 349 funds across three main sectors: IA UK All Companies, IA UK Equity Income, and IA UK Smaller Companies. This provides investors with a wide range of options. However, our analysis reveals that 63% of these funds have historically underperformed.
From the 349 UK Equity funds analysed, just 15% (53) have consistently outperformed 75% of their peers over the periods analysed receiving a top performing 4 or 5 star rating.
Best Performing UK Equity Funds
We analysed all 349 UK Equity funds for performance over the recent 3 months, 6 months, 1 year, 3 year and 5 year periods and feature 10 funds that stand out as having consistently ranked among the very top performers.
Important Information: The value of investments referred to in this article can go down as well as up and you may lose some or all the capital you invest. Past performance is not a reliable indicator of future performance. The information in this article is not a personal recommendation to you to invest. If you are in doubt about any investment, you should consult a FCA-authorised investment firm.
Lower Charges From The Best UK Equity Funds
The table below provides an overview of the current fund size and annual charge for each of the 10 best-performing funds. Notably, the average annual charge for these top-performing 10 funds is 0.68%, which is favourable compared to the 0.78% average annual charge across all 349 UK Equity funds.
For a comprehensive analysis of all 349 UK Equity funds, including detailed performance data, sector rankings, and fund ratings, download our in-depth report.
10 Best UK Equity Funds
The 10 funds below have been selected from the 53 Top Performing UK Equity funds that have received a 4 or 5 star rating for their 1, 3 & 5 year performance and sector ranking.
1. Artemis UK Select I Acc
The Artemis UK Select fund has established itself as a standout performer in the UK equity market. Managed by Artemis Investment Management, this fund has consistently outperformed its sector averages over multiple time frames. Over the past year, the fund delivered a return of 22.44%, compared to the sector average of 12.36%. Its three-year performance stands at an impressive 27.48%, far exceeding the sector average of 12.42%. Most notably, over a five-year period, the fund has generated a remarkable 84.54% return, dwarfing the sector average of 28.67%.
The fund's success can be attributed to several key factors. At the core of its strategy is a rigorous bottom-up stock selection process, where fund managers focus on identifying undervalued companies with strong growth potential. This approach is complemented by the maintenance of a relatively concentrated portfolio, allowing managers to focus on their highest-conviction ideas.
Effective sector allocation has also played a significant role in the fund's outperformance. The managers have demonstrated skill in positioning the portfolio in sectors poised for growth, contributing to its excellent returns.
2. Dimensional UK Value Acc
Since its launch on 14th January 2004, the Dimensional UK Value Acc fund has emerged as a noteworthy performer in the UK equity market, consistently outpacing the sector average across multiple time frames. Over the past year, the fund delivered robust growth of 18.92%, comfortably surpassing the sector average of 12.36%. Its three-year performance was even more impressive, with a return of 34.18% compared to the sector average of 12.42%. Over the past 5 years, the fund has generated a solid 42.68% return, comfortably exceeding the sector average of 28.67%.
While these returns may not reach the heights of some other UK equity funds, the Dimensional UK Value Acc fund stands out for its compelling combination of strong performance and cost-effectiveness. With an annual charge of just 0.34%, it ranks among the lower-priced funds in its sector.
The Dimensional UK Value Acc fund's ability to deliver strong returns while maintaining low fees could make it an attractive option for cost-conscious investors seeking exposure to UK value stocks.
3. Fidelity Special Situations
The Fidelity Special Situations Fund, managed by Alex Wright, has consistently outperformed its sector averages. Its success stems from a unique investment strategy that combines deep value investing with a contrarian outlook.
The fund's performance speaks for itself. Over the past year, it achieved a return of 16.93%, significantly surpassing the sector average of 12.36%. Its three-year performance is even more impressive, with a return of 24.99% compared to the sector average of 12.42%. Looking at the five-year horizon, the fund has generated a robust 41.11% return, substantially exceeding the sector average of 28.67%.
Wright's approach focuses on undervalued stocks with growth potential, often targeting overlooked or under-appreciated companies. This strategy has proven particularly effective in volatile markets.
The Fidelity Special Situations Fund targets businesses with robust balance sheets, capable management, and turnaround potential. The fund's consistent outperformance relative to sector averages is a testament to its robust investment strategy and ability to navigate complex market dynamics effectively.
4. Invesco UK Enhanced Index (UK)
The Invesco UK Enhanced Index fund has consistently outperformed its sector averages, delivering impressive returns over various timeframes. In the past year, it achieved a 17.15% return, significantly beating the sector average of 12.36%. Its three-year performance stands at 33.35%, far surpassing the sector average of 12.42%, while over five years, it returned 39.29% compared to the sector average of 28.67%. This success stems from its "enhanced index" approach, which blends passive and active investment strategies.
The fund's strategy aims to replicate a UK equity index while making strategic adjustments to capitalise on market inefficiencies. Invesco's robust research capabilities and risk management processes, allows the fund to maintain broad market exposure while seeking incremental outperformance, which it has consistently achieved.
5. JOHCM UK Dynamic A Acc
This UK All Companies fund launched in 2008, and currently, it manages £518.15 million of investor assets. The primary objective of this fund is to achieve long-term capital growth by actively managing a portfolio of UK equities.
Managed by Mark Costar, Vishal Bhatia, and Tom Matthews, the JOHCM UK Dynamic A Acc fund focuses on identifying undervalued companies with strong potential for growth. This strategy involves rigorous analysis and selective investment, which has helped the fund to capitalise on market inefficiencies and deliver superior returns.
Over the 3 months, the fund returned 12.75%, compared to the sector average of 8.78%. This short-term performance places the fund among the top performers in its sector. Over the recent 1, 3, and 5 year periods, it has achieved growth of 19.01%, 33.89%, and 40.26%, which were consistently among the top 25% in its sector.
6. Man GLG Undervalued Assets Professional
The Man GLG Undervalued Assets Professional C fund is a prominent player in the UK equity market, focusing on long-term capital growth through investments in undervalued UK companies. With approximately £1.58 billion under management, the fund aims to surpass the performance of the FTSE All-Share Total Return Index over rolling five-year periods. Its investment strategy involves diversifying across various sectors, including financial services, industrials, and consumer cyclicals, which enhances both risk management and the ability to capitalise on market opportunities.
The fund's performance has been consistently strong, demonstrating its ability to outpace sector averages across multiple time frames. Over the past three months, it achieved a return of 10.65%, and over six months, it delivered an impressive 17.30%, both significantly exceeding the sector average of 8.78%. Its five-year performance is particularly noteworthy, with a growth of 39.55% compared to the sector average of 28.67%. This consistent outperformance has positioned the Man GLG Undervalued Assets Professional C fund among the top-performing funds in the UK All Companies Sector across all five periods analysed, underscoring its effectiveness in identifying and capitalising on undervalued assets in the UK market.
7. Schroder Recovery
The Schroder Recovery Z Acc fund focuses on investing in UK companies that are undervalued but have strong potential for recovery. Its primary goal is to achieve capital growth that exceeds the FTSE All Share (Gross Total Return) Index over a period of 3 to 5 years. The fund manages around £905.17 million of investors' assets and commits at least 80% of these assets to UK equities, particularly targeting companies expected to bounce back.
In the last six months, the fund returned 13.48%, slightly below the sector average of 14.02%. However, over the past five years, it has achieved a remarkable growth of 42.36%, far surpassing the sector average of 28.67%. This performance places it among the top performers in the UK All Companies sector.
8. JOHCM UK Equity Income
Launched on 30 November 2004, the JOHCM UK Equity Income A Acc fund is expertly managed by James Lowen and Clive Beagles. This fund is designed to generate a high level of income and long-term capital growth by investing in UK equities, particularly those with reliable cash flows and strong dividend yields. It currently manages approximately £1.67 billion, demonstrating its significant presence in the market.
This fund has demonstrated impressive growth in the UK Equity Income sector, consistently ranked among the top-performing funds over the 5 periods analysed. Over the past 3 months, it has returned growth of 17.43%, which ranked 1st out of 77 funds. Over the recent 1, 3 & 5 year periods, it achieved growth of 20.88%, 26.80%, and 42.11%, which were consistently among the best in its sector.
9. Man GLG Income C Professional Acc
The Man GLG Income C Professional Acc fund has consistently delivered strong performance, surpassing its sector averages over various periods. In the past year, the fund achieved a return of 19.90%, well above the sector average of 13.61%. Over three years, it posted a return of 36.35%, significantly higher than the sector average of 20.03%. Its five-year return is 44.68%, compared to the sector average of 32.71%.
This success is driven by the fund's value-oriented strategy, which focuses on finding undervalued companies with strong dividend potential and growth prospects. The fund's flexible investment mandate allows it to invest across different market capitalizations, helping its managers identify the best income-generating opportunities. The managers use rigorous fundamental analysis to select companies with strong balance sheets, sustainable dividend policies, and potential for dividend growth.
The fund's emphasis on total return, rather than just income, has also played a key role in its robust performance. While the value-oriented approach can lead to short-term volatility, the Man GLG Income C Professional Acc fund has proven its ability to deliver superior long-term returns. This makes it an attractive choice for investors looking for both income and capital growth in UK equities.
10. Vanguard FTSE UK Equity Income Index
The Vanguard FTSE UK Equity Income Index fund has consistently delivered strong performance, outperforming sector averages across various timeframes. Over the past year, the fund achieved a return of 16.49%, exceeding the sector average of 13.61%. Its three-year performance is even more impressive, with a return of 35.32% compared to the sector average of 20.03%. Over five years, the fund maintained a robust performance of 36.83%, surpassing the sector average of 32.71%.
The fund aims to track the FTSE UK Equity Income Index, offering broad exposure to UK companies with higher-than-average dividend yields. This index fund's success can be attributed to several key factors. Firstly, as an index fund, it provides low-cost exposure to a diversified portfolio of UK income-generating stocks, which helps eliminate the risk of underperformance due to poor stock selection. Vanguard's efficient management and large scale enable minimal tracking error and low operating expenses, which contribute to higher returns for investors.
Additionally, the fund's focus on companies with above-average dividend yields has been advantageous, especially during periods of market volatility. These stocks often exhibit more stability and provide a steady income stream. The passive approach of the fund ensures consistent exposure to the UK equity income market, allowing it to capitalise on the long-term growth potential of dividend-paying companies while minimising the impact of short-term market fluctuations.
The Different UK Equity Sectors
The UK equity fund market is primarily divided into three main sectors, each with its distinct focus and investment approach.
IA UK All Companies Sector
The IA UK All Companies sector includes funds that invest broadly across the UK stock market, covering companies of various sizes and sectors. These funds typically aim for capital growth and may include both value and growth strategies.
IA UK Equity Income Sector
The IA UK Equity Income sector, concentrates on companies that pay higher-than-average dividends. These funds aim to provide a steady income stream along with potential capital appreciation, often focusing on more established, cash-generating businesses.
IA UK Smaller Companies sector
The IA UK Smaller Companies sector specialises in investing in smaller UK firms, typically those outside the FTSE 100 index. These funds often seek higher growth potential, as smaller companies can offer greater opportunities for expansion, but they may also carry higher risk. Each sector caters to different investor needs and risk appetites, providing options for those seeking broad market exposure, income, or growth from smaller, potentially more dynamic companies.
Average Performance of each UK Equity fund sector since the Brexit referendum
Summary
The UK is home to some of the most successful companies in the world. Due to their global diversification, these companies can absorb many of the UK's political and economic changes. Additionally, many UK companies with less global reach have managed to thrive despite the uncertainty of Brexit. As highlighted in this report, a proportion of the available UK Equity funds have consistently delivered strong returns, even in the face of political and economic uncertainty.
Despite its unpopularity in recent years, the UK Equity market remains a crucial sector for investors. Excluding it could increase your portfolio's risk level and potentially result in missed growth opportunities.
For a complete analysis of the UK equity fund landscape, download our comprehensive report now and gain access to detailed performance data and insights on all 349 UK equity funds.
Download the full report now and take the first step towards optimising your investment portfolio.
Getting The Most From Your Portfolio
Diversification is essential to maximising opportunities and maintaining efficiency. Research has shown that having a diverse portfolio of high quality funds across different markets and asset classes improves long term portfolio returns. Through continuous research and data analysis Yodelar provides investors with the opportunity to invest in suitably risk rated portfolios created to maximise opportunities efficiently.
Book a no obligation call with one of our advisers to find out more about our portfolios.
