This year has been a rollercoaster, with UK funds struggling in the first quarter before recovering from their nadir at the end of March to make high single-digit returns.
Within this tumultuous time, it has allowed some formerly struggling funds to bounce back. In this series, Trustnet looks at the funds that have had a miserable decade, landing in the bottom quartile of their respective Investment Association sector, but where there are signs of rebound in 2026.
In particular, funds with a value style have performed well so far this year. The MSCI United Kingdom Value index was up 11% in the first half, more than double the momentum style (4.4%), which was second. Quality has been the worst place for investors, with the style broadly flat in 2026 so far.
Value investing dominance has particularly benefited income funds in IA UK All Companies sector. These funds can be found in the broader UK peer group for a multitude of reasons, although typically it is because there is no income requirement, unlike the IA UK Equity Income sector.
Here funds must have three-year rolling yield above the FTSE All Share’s yield at their year-end, and must achieve at least 90% of the FTSE All Share’s yield on an annual basis.
Montanaro UK Income was removed from the income sector in 2016 for failing to adhere to its rules and was recategorised to the IA UK All Companies peer group.
Since then it has been tough sledding. The fund has made 72.7% over the past decade, a bottom-quartile effort in the sector. Its 1.3% loss over five years is also in the bottom 25% of its peers, with the fund sitting in the bottom quartile of sector in 2022, 2024 and 2025.
Performance of fund vs sector over 10yrs
Source: FE Analytics
As well as being an income play, the fund is also heavily invested in mid- and small-caps, which have had a torrid past decade relative to their large-cap cousins. However, so far in 2026 things have turned around, with the fund up 9.9% in the past six months.
Recommended by analysts at RSMR, they said the asset management firm has a strong long-term track record investing in smaller companies and has a “substantial team of analysts to carry out proprietary research into stocks which receive less coverage than their larger peers”.
“The fund is well diversified from a sector level and in terms of the underlying stream of dividends and is not overly reliant on conventional income sectors such as resources or banks. We believe that this is an extremely attractive offering for investors seeking a healthy and sustainable level of equity income and/or exposure to smaller companies.”
It was one of four funds in the IA UK All Companies sector to make the list, alongside IFSL Church House UK Equity Growth, M&G UK Sustain Paris Aligned and Premier Miton UK Focus.
Source: FE Analytics
In the IA UK Equity Income sphere, Fidelity Enhanced Income made the list. Its 8.7% return in the first half of 2026 was good enough for the top quartile of the peer group, although over the long term it has struggled.
The fund aims to provide an enhanced income. Rupert Gifford is in charge of the underlying equity positioning, looking for solid, blue-chip companies that have historically coped well with testing market conditions.
Given an ‘A’ rating by analysts at Titan Square Mile, they noted that the portfolio is managed using a “cautious, long-term approach”.
“It is possible therefore, that the fund is likely to underperform the broader market in strongly rising markets, such as we saw in 2025. However, the fund's track record has proven to be highly resistant during more challenging periods, as evidenced by its return profile in 2022,” they noted.
The second part of the fund is run by Vincent Li and uses the derivatives market (in particular a covered call options overlay strategy), to boost income.
“Whilst it is complex, it has proven successful at delivering additional income to help the fund meet its yield target over time,” the Titan Square Mile analysts notedsaid.
“We think the combination of these two elements results in an appealing proposition for investors who have a requirement for income.”
Lastly, the sole entrant from the IA UK Smaller Companies sector is IFSL Church House UK Smaller Companies. It has made a total return of 9.9% so far this year, the third-best in the peer group. It has had the worst decade however, up just 39.4% over 10 years.