With this in mind, FE Trustnet asked financial advisers for their preferred managers with a strong stock-picking strategy.
Patrick Connolly, head of communications at AWD Chase De Vere, says that finding genuine stock pickers is a very difficult task but investors will reap the rewards if they are successful.
"All mangers will claim they are stock pickers, but the fact is that most active managers underperform against their benchmark," he commented.
"Either it is incredibly difficult to do, or ones that do achieve it are very lucky. Consistent over performers are very small in number, and the challenge of advisers and investors is to locate the managers who are able to consistently beat their benchmark year-on-year."
Richard Plackett
Connolly highlights BlackRock's Richard Plackett as a manager he likes when it comes to a bottom-up approach.
"Plackett has an excellent long-term track record and he focuses on finding opportunities that other managers overlook or are unable to see. In these difficult times, this ability allows Plackett to consistently outperform."
According to FE Analytics, FE Alpha Manager Richard Plackett has made 311.57 per cent over 10 years. This beats his peer group composite, which has returned 191.62 per cent over the same period.
Performance of manager vs peers over 10-yrs
Source: FE Analytics
Plackett’s career in fund management started in 1997, when he ran a number of portfolios at M&G. He now heads up BlackRock UK Special Situations and the closed-ended Throgmorton Trust.
He has been running BlackRock UK Special Situations since 2004 and the fund is a top-quartile performer over three and five years.
Julie Dean
"Julie Dean (pictured) is another very good stock picker," continued Connolly. "[Cazenove UK Opportunities'] approach is to look into the business cycle, but actually 80 per cent of the fund is governed by stock selection." "This approach, combined with her raw talent, is a great recipe for consistent outperformance."
Dean has consistently beaten her peers over a long career. Over five years she has returned 55.10 per cent compared with 5.28 per cent from her rivals.
Performance of manager vs peers over 5-yrs
Source: FE Analytics
Dean heads a number of UK-focused portfolios at Cazenove Capital Management. She has run the five crown-rated Cazenove UK Opportunities since 2002, with FE Alpha Manager Steve Cordell joining the management team last year.
The £741.1m fund has registered top-quartile performance over one, three, five and 10 years under her leadership.
Tim Steer
AFI panellist Ben Willis says that Tim Steer and Philip Rodrigs’ investment approach makes them stand out from other stock-picking managers.
"Tim Steer is good stock picker from a UK perspective. He approaches investing by analysing reports and accounts in a very comprehensive manner and looks for anomalies within their balance sheets," he explained..
"He does short at times if he sees something in the company’s structure that doesn’t add up. He looks in company fundamentals instead of the macro."
Steer manages the Artemis UK Growth fund and the FSA-offshore recognised Artemis UK Hedge portfolio, having previously worked at Henderson Global Investors.
FE data shows the manager has had mixed fortunes against his peers over the long-term. However, he has beaten his rivals over three and five years.
His 404.9m Artemis UK Growth portfolio is a top performer over three years.
Philip Rodrigs
Willis said: "Rodrigs is another standout stock picker and he uses a very distinct investment analysis."
"The fund has a very definitive screening process whereby he concentrates on valuations, cash flows and balance sheets."
"He is a tactician that focuses on the stock's fundamentals and ignores macro noise."
According to FE Analytics, FE Alpha Manager Philip Rodrigs has regularly outperformed his peer group composite. Over five years, the manager has returned 64.95 per cent while his peers have returned 20.10 per cent.
Performance of manager vs peers over 5-yrs
Source: FE Analytics
He currently manages the £444.8m Investec UK Smaller Companies and Investec UK Alpha funds. The former, which he has run since June 2006, has delivered top-quartile performance over three and five years.
John Wood
Chris Wise, investment director at Gemmell Financial Services, has consistently used John Wood’s JOHCM UK Opportunities fund because of the FE Alpha Manager’s stock-picking capability.
"I suppose from a UK perspective, the boys from JOHCM UK Opps are very good stock pickers. John Wood has a great track record in the UK and he is a manager that we have used and will continue to use."
"He is right up there for micro matters," Wise added.
FE Alpha Manager John Wood has beaten his peer group composite over three, five and 10 years.
Having worked at Newton Investment Management earlier in the decade, Wood has run the JOHCM UK Opportunities fund since November 2005. Since then, the fund has been a top-quartile performer over three and five years.
In a recent FE Trustnet article, industry experts chose their favourite mangers for judging the macro outlook.