Studies commonly show that many active funds struggle to beat the market, especially in the longer run. But as ever, some anomalies can be found and spotting these can reward savvy investors.
Each year we look at relatively small funds that scored well on a particular measure of outperformance for the level of risk taken (‘Six overlooked funds making big returns’), with the rationale that funds with fewer assets and hungrier investment teams can continue to deliver the goods.
This same measure can be used for funds more generally, without applying size limits, and point us towards some strong performers.
With that in mind, we have scanned the universe of funds in mainstream equity sectors and picked out those that have a high ‘information ratio’ versus their benchmark over the past three years.
We have favoured this metric in the past as it measures returns not in absolute terms but relative to the amount of risk being taken by the manager. In short, it doesn’t just indicate outperformance versus a benchmark. That should screen out some of the funds that have simply had good luck with risky bets.
| Equity funds with high information ratios | ||
|---|---|---|
| Fund | Region | Annualised information ratio versus benchmark over three years |
| M&G Asian | Asia/EM | 1.16 |
| Templeton Global Emerging Markets | Asia/EM | 1.16 |
| Merian Asia Pacific | Asia/EM | 1.12 |
| Europe | ||
| Artemis SmartGarp European Equity | Europe | 0.87 |
| Waverton European Dividend Growth | Europe | 0.85 |
| JPMorgan Europe Dynamic ex UK | Europe | 0.52 |
| Japan | ||
| Nomura Japan Strategic Value | Japan | 1.45 |
| Morant Wright Japan | Japan | 1.1 |
| Polar Capital Japan Value | Japan | 0.64 |
| Global | ||
| Invesco Global Equity | Global | 1.3 |
| Rathbone Global Opportunities | Global | 1.21 |
| Blue Whale Growth | Global | 0.9 |
| UK | ||
| Ninety One UK Special Situations | UK | 1.24 |
| Artemis SmartGarp UK Equity | UK | 0.96 |
| Artemis UK Select | UK | 0.83 |
| JPM UK Equity Plus | UK | 0.83 |
| Artemis Income | UK | 0.75 |
| BNY Mellon UK Income | UK | 0.74 |
| Invesco UK Equity High Income | UK | 0.73 |
| US | ||
| JPM US Select Equity Plus | US | 0.48 |
| Source: FE, 17/06/25 |
One drawback of this metric is that the technicalities of the calculation mean it tends to work better with open-ended funds than with investment trusts.
As such, we have restricted our sample to open-ended equity funds in Investment Association sectors.
We have focused on the main sectors for certain regions, with a look at dedicated small-cap sectors in the two instances where they exist. Plenty of funds stand out here, with some fresh faces, as well as some by now familiar names, cropping up.
An information ratio of 0.4 or higher is generally regarded as good, and plenty of funds have exceeded this substantially over the period of analysis.
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Global and beyond
To start with a potentially lesser-known name, Invesco Global Equity (GB00B3RS9Q62) comes with a high annualised ratio, of 1.3, over the period.
The fund has a fairly compelling approach. Manager Andrew Hall invests in what he considers to be his “best ideas” across different industries, regions and market capitalisations, with a process focused on bottom-up stock selection.
The portfolio has 63 holdings, and tends to focus on cash-generative companies trading at a discount to their long-term intrinsic valuations.
Many global equity fund managers have struggled to keep up with markets without backing the biggest US names in recent years, and Invesco Global Equity does not appear especially contrarian in this regard.
Around 62 per cent of the portfolio is in US shares, with 8 per cent in the UK, the second-biggest regional weighting. The fund’s list of top 10 holdings includes Microsoft (US:MSFT), Amazon (US:AMZN), Meta (US:META), Nvidia (US:NVDA) and Apple (US:AAPL), but names such as 3i Group (III) and Canadian software and services provider Constellation Software (CA:CSU) are also present.
Invesco Global Equity has generated a decent chunk of outperformance against the MSCI World in the medium term: it’s only slightly ahead over the three years to 16 June 2025 but has returned 95.3 per cent over five years, versus 75.5 per cent from the index.
Elsewhere, some other names stand out in the global sector, from Rathbone Global Opportunities (GB00B7FQLN12) with its mixture of growth companies and more defensive stocks to Blue Whale Growth (GB00BD6PG563), an erratic fund that has nevertheless generated good gains.
The Blue Whale fund can experience significant churn, but its recent top 10 holdings list includes companies ranging from Nvidia and Broadcom (US:AVGO) to asset manager Apollo (US:APO) and pharma name Sartorius (DE:SRT).
Plenty of funds also stand out in Asia and the emerging markets, two regions that have offered variable returns in recent years.
China, whose stock markets have regained their poise this year, remains a dividing line among managers, and it’s worth noting that M&G Asian (GB00B6SQYF47) has a sizeable position via its 26.9 per cent allocation.
The fund, which targets undervalued shares, has much smaller positions in other regions, with 12.7 per cent in India for example. Other funds that make the list include Templeton Global Emerging Markets (GB00B7MZ0J00) and Jupiter Merian Asia Pacific (GB00B1XG9607).
Our list of Japanese funds offers a mixture of better-known names and more obscure offerings. Man Japan CoreAlpha (GB00B0119B50), with its big focus on sectors such as financials, has a distinct value style and has served investors well at times when the growth style of investing has moved out of favour.
A name less familiar to many, Nomura Japan Strategic Value (IE00B3W35Q81), also makes the list. This fund focuses in part on the corporate reform story exciting investors in the region, with a mention of “the unlocking of value at stock level, emphasising the long-term investment theme of improving returns at a corporate level”.
Winning at home
If we turn to UK portfolios, of which we have included several in our table, readers might spot some familiar names enjoying a rich run of performance.
Many of these funds, notably Ninety One UK Special Situations (GB0033063636), Artemis SmartGarp UK Equity (GB00B2PLJM64) and Artemis UK Select (GB00B2PLJG05), have a value investing onus, which means the teams must continue to spot good recovery stories if their outperformance is to continue.
We noted last year that these funds had enjoyed an especially good 2024 but owed this partly to big bets on some of the hottest FTSE 100 stocks of the time.
Of these, Artemis UK Select still has a big chunk of exposure to Barclays (BARC), Rolls-Royce (RR.), NatWest (NWG) and International Consolidated Airlines Group (IAG), for example.
Around half of that fund is in financials. The Ninety One fund has big exposure to Rolls-Royce and NatWest, and around a quarter of its assets apiece in consumer discretionary and financials stocks.
Artemis’s SmartGarp franchise is also having a moment in the sun, as we have noted in recent coverage of outperforming UK and European equity funds and a recent Ideas Farm column. Like its peers, the UK fund has big exposure to names such as Barclays, as well as a 43 per cent allocation to financials.
However, in this group too we see some less heralded funds. JPM UK Equity Plus (GB00BW4Q9B11) has some familiar UK large-cap stocks among its top 10 holdings, but actually takes a ‘long/short’ approach. Its biggest recent short exposures are in the industrials and consumer discretionary sectors.
Only two dedicated small-cap sectors crop up in our sample, focused on Europe and the UK. The results are omitted from the table but funds with strong information ratios here include Invesco European Smaller Companies (GB00BJ04GP12) and JPMorgan UK Smaller Companies (GB00B2359L95).
