IA North America funds delivered some of the strongest returns of any sector over the past three years, but only three of its 146 funds earned a FE fundinfo Crown Rating of five in the latest rebalance as concentrated gains in a handful of US mega-cap stocks made the S&P 500 an increasingly difficult benchmark for active managers to beat.
The IA North America sector returned an average of 55.6% over the three years to the end of June, more than all but five of the other 50 IA sectors. However, just 2% of its funds hold a five-crown rating after this month's rebalance, down from 10.3% previously, while 74 funds, more than half the sector, sit in the bottom two rating bands.
Crown Ratings measure performance against each fund's own benchmark rather than raw returns. The S&P 500's gains over the past three years have concentrated in a small number of tech stocks that most active managers hold below benchmark weight, making a rising, narrow market a demanding test for stock pickers.
Over the three years to 30 June 2026, the average IA North America fund lagged the S&P 500 by 10.5 percentage points, the average IA Technology & Technology Innovation fund by 51.3 percentage points and the S&P 500 Information Technology sector by 58.1 percentage points.
Alger American Asset Growth and Alger Focus Equity held onto their five-crown rating, while iShares Edge MSCI USA Momentum Factor UCITS ETF moved from four to five; these are now the only funds in the peer group with the top rating. Morgan Stanley US Advantage, Janus Henderson US Growth and TM Natixis Loomis Sayles U.S. Equity Leaders were among those downgraded from five crowns.
Source: FE fundinfo
IA China/Greater China shows the opposite pattern. Eleven of its 45 funds, nearly a quarter, now hold a five-crown rating, up from none at the previous rebalance, while 16 funds, more than a third, remain in the bottom band.
RBC Funds (Lux) China Equity moved from the bottom rating to the top in a single rebalance. Other five-crown funds in the peer group include AB China A Share Equity Portfolio, Jupiter China, Ninety One China A Shares, GS All China Equity Portfolio and Janus Henderson China Opportunities.
Zachary Ryan, head of research at FE Investments, said: "Market leadership rarely changes all at once, but when it does, it often challenges some of the assumptions investors have become most comfortable with.
"This rebalance suggests we're entering a period where regional and sector leadership is becoming much less predictable, making diversification and disciplined portfolio construction more important than simply backing what has worked historically."
IA Technology & Technology Innovation is the highest-rated sector overall following the rebalance. More than a third of its 16 funds now hold a five-crown rating, up from 6.3% (one fund) before, and none sit in the bottom band.
It was also the top-ranked of all 51 IA sectors by three-year return, at almost 107%, though a meaningful share of that return rests on a small number of AI-linked names.
AB International Technology Portfolio, Herald Worldwide Technology, Janus Henderson Global Technology Leaders, Janus Henderson Sustainable Future Technologies, Polar Capital Global Technology and T. Rowe Price Global Technology Equity are the peer group's top-rated funds.
Source: FE fundinfo
Artemis Fund Managers is the group with the highest proportion of its fund range holding five crowns, as nine of its 22 funds have the top rating following a very strong showing in recent years. These are Artemis Global Income, Artemis High Income, Artemis Income, Artemis Monthly Distribution, Artemis Short-Duration Strategic Bond, Artemis SmartGARP European Equity, Artemis SmartGARP Global Emerging Markets Equity, Artemis SmartGARP Global Equity and Artemis SmartGARP UK Equity.
Premier Miton Investors recorded the largest increase in five-crown funds of any group, growing its total from two to eight, led by its UK equity and multi-asset ranges. Premier Miton UK Smaller Companies jumped from the bottom rating to the top in the rebalance.
Legal & General UT Mgr Ltd grew its five-crown count from four to nine, driven mainly by its Multi-Index range.
Seven funds reached a five-crown rating for the first time this rebalance, including IFSL 7IM Defensive Strategy, MF Vela Defensive, MGTS SIIION Cautious and WS Zennor Japan Equity Income.
Three of the seven - MI Classic Passive Portfolio Aggressive, MI Global Passive Portfolio Aggressive and MI Global Portfolio Aggressive - are managed by Tatton Investment Management.