Top 50 Funds 2022 – Investors’ Chronicle

  • We highlight 50 outstanding options in the main regions and asset classes
  • The latest update allows us to diversify the choice by investment style and address some idiosyncratic fund challenges

Choosing a good active fund is easier said than done. Some are difficult to analyze, few offer a consistent level of outperformance and to top it off there are thousands of options available to UK investors. But the best have rewarded their backers far more richly than the average passive fund, while also serving as a more diversified and less intensive form of investment than exclusive stock picking.

If that explains the active fund’s enduring appeal, then sifting through all the available options seems like an impossible task. Our annual list of the best funds seeks to help with that problem by providing a concise selection of options that we consider to be the most attractive plays across different equity regions and asset classes. While this is a concise list of just 50 funds and certainly not exhaustive, it could serve as a useful starting point for your own research into the portfolios on offer.

The process of choosing an active fund can itself be nuanced and highly idiosyncratic, and our selection reflects this. We have consulted with a nine-member specialist panel on the status of last year’s list, considered the options and asked which names should stay, go or go. Multiple factors can determine whether an active fund is attractive, from its investment theme to the team and process, the size of the fund, the fee structure, the track record and the risks being taken. For individual investors, it’s important to ask yourself if a fund is aiming for the desired outcome for its portfolio and if its process seems up to scratch.

Changes to this year’s list

While everyone has individual preferences, our panelists generally agreed that the majority of the 2021 roster looks in good shape, despite the struggles all investors have faced over the past year. However, some problems have arisen: the imminent exit of a veteran fund manager with a very distinctive approach has led us to remove a popular Japanese equity fund from the list, while concerns about a European fund paying dividends from the capital has caused their expulsion. We have also made cutbacks where two funds appear to be doing similar work to each other.

A more structural change has been to seek a greater variety of investment styles where possible. Recent market conditions have made it painfully clear that growth stocks can fall from grace and that some portfolios are overly reliant on the continued success of that particular style. Parts of our roster have had a particular focus on growth and quality managers, prompting us to introduce value options when needed. While markets may well turn in favor of growth on a sustained basis over time, we think it is worth highlighting options that can complement each other in a portfolio. However, in categories such as global growth, as the name suggests, we have been left with funds that focus primarily on growth, although individual funds here may differ materially in other respects. The 11 changes made to the list this time have not changed. its overall structure, with stocks making up much of a selection broadly focused on risky assets. Similarly, bonds and alternative asset classes continue to be fairly well represented in recognition of investors looking for diversification or return outside of equity markets. One cosmetic change we’ve made, for the sake of simplicity, is to group funds into broad categories, such as growth stocks, income stocks, and alternatives.

As usual, it’s worth emphasizing that these funds may not suit your individual goals and that the list should simply serve as one part of your initial research. While we consider these funds to be solid options, there is no guarantee that they will do well in the future. Our focus on funds with different styles may even mean that one selection in a given category could underperform while the other thrives.

The limitations of running a 50-strong list also mean that many good backgrounds don’t show up. Investors certainly shouldn’t overlook a fund due to its absence from the list, or even because it dropped out of our selection. Finally, those who prefer to combine active funds with trackers can check out the options in our Top 50 ETFs of 2022 list, published in July.

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