Six UK funds launched in 2011 have managed to perform in the top quartile among their peers over their first five years, according to data from FE Analytics. 
Currently, many investors still prefer to wait for funds to rack up a decent-length track record before investing, despite continuous warnings that past performance is not an indication of the future.
However, for those brave enough to invest at the very start, 23 funds set up between 1 January 2011 and 31 July 2011 performed in the top quartile over a five year period relative to their peers, including six UK funds.
In the UK, the majority of the funds have a high weighting to mid and small-cap companies, representing the strong rally this area of the market saw in 2012 and 2013.
Below is a look at each fund individually to see how they have managed to outperform some of their much more established peers.
Conbrio Sanford Deland UK Buffettology
The £54.7m fund, run by Keith Ashworth-Lord, is the largest fund on this list, and has a target to return more than the UK stock market over a five to 10 year period.
With only 28 investee companies, Conbrio Sanford Deland UK Buffettology is a conviction fund holding a number of small and mid-cap companies, including car part test maker AB Dynamics and pizza maker Domino’s Pizza among its top ten.
As its name suggests, Ashworth-Lord follows the investment principles of legendary US investor Warren Buffett such as focusing on companies with strong operating franchises and experienced management teams.
Performance vs FTSE All Share over 5yrs
Source: FE Analytics
The five crown-rated fund does not hold any mining or oil stocks, which boosted its performance in recent years, particularly in 2015, when commodity prices took a tumble.
It was the top performer that year, returning 27.86 per cent to investors, however has struggled so far in 2016 as prices have been back on the upswing.
“We hold no miners or oil and gas explorers and accordingly we did not benefit from their recovery,” Ashworth-Lord said.
Post-Brexit, the fund has also struggled, with 20 of its 28 firms registering share price declines since the EU referendum.
However, the fund is a top quartile performer over three and five years, and has returned more than double the UK stock market over five years, thanks in part to the manager’s strict bottom-up approach.
Run by FE Alpha Manager Siddarth Chand Lall, Marlborough Multi Cap Income fund can invest across the FTSE All Share for opportunities.
However, while the fund has diversification across the market cap range there is a strong bias away from large caps with mid and small caps account for the majority of the portfolio.
The £1.4bn fund includes the likes of pub owner Greene King and Dairy Crest among its top ten holdings, as well as FTSE 100 constituent SSE Group.
The four crown-rated fund aims to generate a growing level of dividend income as well as long term capital growth, and currently has a yield of 4.88 per cent. FE data shows it has so far achieved this feat as well, with Chand Lall having grown the fund’s dividend in each calendar year so far.
Every holding within the fund must have a yield and the maximum stock position size is around 2 to 2.5 per cent.
Dividend chart since launch
Source: FE Analytics * Figures based on a £10,000 investment at launch
Much like the Buffetology fund above, it has struggled this year as a rebound in commodity prices has caused mining and oil stocks – an area it has little exposure to - to rally.
However, the fund has been top quartile for three of its five years, and was the top performer in its sector in 2013, when mid-caps and small caps were performing particularly well.
Ardevora UK Equity and UK Income
The two funds, co-managed by FE Alpha Managers Jeremy Lang and William Pattisson are both in the top quartile over five years.
Ardevora UK Equity, which is also managed by Gianluca Monaco and Ben Fitchew, is top quartile over one, three and five years, and performed particularly well in 2013, where it was top decile.
The £150m five crown-rated fund aims to provide long term capital growth by recognising where the market can be wrong. The managers, for example, have an approach centred around cognitive phycology and the belief that management teams, analysts and general investors are prone to biases which can be taken advantage of.
It also has the ability to hold short positions, and has a long/short ratio of 150/50 (150 per cent of its net asset value will be in long positions while 50 per cent will be in short).
The £221m UK Income fund is run similarly (though without the shorting option) and also attempts to pick stocks in the market that it believes have been misjudged.
Performance of funds vs FTSE All Share over 5yrs
Source: FE Analytics
It is in the top quartile over, three and five years, and as the above graph shows, both Ardevora funds have outperformed the FTSE All Share over a five year period, with almost double the returns of the UK stock market.
The Income fund is more defensive, however, with the likes of pharma giant GlaxoSmithKline, Imperial Tobacco, and British American Tobacco, while the Equity fund includes the likes of Premier Inn and Costa Coffee owner Whitbread and online clothing store ASOS among its top ten holdings.
Also on the list of top performing young guns is FE Alpha Managers Chris St John’s AXA Framlington UK Mid-Cap fund.
Over a five year period, the three crown-rated fund has returned 138 per cent to investors, the highest among the group, and is top quartile in its sector over three and five years and has comfortably beaten its FTSE 250 benchmark over those time frames as well.
The £137m fund focuses on mid-cap stocks, with the likes of Tullow Oil, Rightmove and Paysafe in its top ten holdings, representing a diverse group, which also includes small biotech firm Clinigen.
It focuses on “well capitalised companies that have growing profits, cash flows and dividends,” St John says.
Performance vs benchmark over 5yrs
Source: FE Analytics
The fund was top quartile every year until 2016, when it was impacted by a change in commodity prices and the effect of Brexit, when mid-caps were hit particularly hard.
Over five years, the fund has outperformed its benchmark by 34 percentage points, and, despite uncertainty in the market, St John says there are still opportunities to be found in the mid-cap space.
“In these difficult times, it is worth remembering that there is always opportunity in the mid-cap sector for those who are brave and have a longer term investment horizon,” he said.
The £70m Fidelity FAST UK, run by Aruna Karunathilake, rounds out the list of early high fliers, but is the only one not to have been in the top quartile in its first year.
The five crown-rated fund was bottom decile in 2012, its first full year, but performed particularly well in 2013 and 2014, giving it a top quartile rating over its first five years.
While 70 per cent of the fund must be invested in UK companies, Karunathilake has discretion to invest in other countries as well, with the likes of Novo-Nordisk and Bunzl in its top ten holdings.
Performance vs benchmark over 5yrs
Source: FE Analytics
The fund, which is a Luxembourg-domiciled SICAV, has outperformed its benchmark over five years by 24 percentage points, and is in the top quartile among its peers over one, three and five years.
Like the Ardevora offering, Fidelity FAST UK has the ability to take short positions to boost returns. It is also underweight the FTSE 100 relative to the FTSE All Share and overweight mid-caps – though Karunathilake holds short positions across the market cap spectrum.
Its largest sector bets are consumer services, industrials and technology but underweight financials, telcos and basic materials.
