Top-performing funds among sectors with biggest range of returns

Investing comes with plenty of hazards, but one risk we discuss less often is that of opportunity cost. Simply put, by researching and investing in one fund you could miss out on holding something that performs better or better performs the role you envisage for it. 

And while a fund’s performance might look great when examined on its own, the sheer number of vehicles with superior returns could justify some shopping around.

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With that in mind, we have run some basic numbers, asking which fund sectors saw the biggest performance gap between the best and worst-performing option over a five-year stretch. That gives us some sense of the difference in recent returns, and where it might make sense for you to weigh up your options.

To provide this analysis we looked at Investment Association (IA) and Association of Investment Companies (AIC) fund sectors covering the main equity regions. We looked at “generalist” funds rather than those dedicated to one market cap segment, such as small or mid-cap shares. We also stripped out names that didn’t appear on the ii platform.

Surprise results

Our time frame, the five years to 21 May 2026, shows the US equity market maintaining its dominant position even if that has softened. The S&P 500 has returned around 90% over this period in sterling terms, putting it ahead of the FTSE 100 (on around 78%), Japan’s Topix (62%), the FTSE Europe ex UK (52%) and the MSCI Emerging Markets index (50.4%).

We might therefore expect the biggest gap to emerge between the best and worst-performing US equity fund, given that the underlying market has offered the best performance. But it seems the opposite has happened.

Source: FE Analytics, based on five-year return (%) to 21/05/26. Past performance is not a guide to future performance.

As the table shows, we see a performance gap of 136.5 performance points between the top and bottom US fund over this stretch. But it’s Japan that stands out the most on this front.

This is partly a function of the fact that the top-performing Japanese equity fund, Nomura Fds Japan Strategic Value I GBP, has beaten all the other generalist funds in other sectors over our period of analysis. It has generated an enormous 190.8% return over the five years. The worst performer, FTF Templeton Japan Eq Fd W Acc GBP, has lost around 21%.

What’s going on with the Nomura fund? It seems to tap into the story of corporate reforms in Japan, with its stated strategy focusing on “the unlocking of value at stock level, emphasising the long-term investment theme of improving returns at a corporate level”.

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The fund’s sector allocations are not massively out of whack with those of the underlying market, with a decent level of exposure to industrials, consumer discretionary shares and financials.

The top holdings list, meanwhile, includes Toyota Motor Corp ADR, Sony Group Corp ADR, Tokio Marine Holdings, Japan Post Bank and Hitachi.

The Nomura fund is not the only “value” fund doing well, with the Man Japan CoreAlpha Profl Acc C fund sitting on a return of 116% over the same period. 

It’s also worth noting that while we have excluded dedicated small-cap funds from this analysis, such portfolios have also done a good job of playing the corporate governance reform story. Nippon Active Value Ord, one such example, has generated roughly the same return as the Man fund.

Global winners

The global sector is enormously disparate and we have looked beyond funds that, for example, focus on a specific sector or theme. But the performance gap between the best and worst generalist names is sizeable.

That reflects the fortunes of two names with very different approaches, both of which are fairly well known.

Topping the performance table is WS Blue Whale Growth I Sterling Acc, which has a concentrated and high-turnover approach and looks to maximise outperformance. 

It only has 33 holdings and has a big focus on both the US and what we might broadly define as technology businesses, but the portfolio can change significantly based on the team’s response to new developments. 

They have been among the managers to ditch some Magnificent Seven stocks on the back of concerns about artificial intelligence (AI) spending, for one.

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If we look at recent prominent holdings, that ranges from companies viewed as AI plays (NVIDIA Corp, Broadcom Inc, SK Hynix, Vertiv Holdings Co Class A and Lumentum Holdings Inc) to defence company Leonardo SpA Az nom Post raggruppamento. 

Like Fundsmith Equity I Acc, the Blue Whale team doesn’t disclose position sizes in its monthly factsheets but tends to have concentrated bets. Morningstar data from the end of 2025 suggests that the fund’s top position at the time, in Nvidia, accounted for almost a 10th of the portfolio.

The worst-performing global fund, which has lost nearly 50%, is one readers may be tired of hearing about. That’s global Nick Train vehicle Lindsell Train Ord.

From Asia to Europe

We recently discussed the fact that avoiding China has paid off for emerging market investors in recent years, and this analysis only reinforces that point. 

The top-performing fund from Asia and the emerging markets is Invesco Em Mkts ex China UK Z Acc, which recently had especially big allocations to leading markets South Korea (on 23.4%) and Taiwan (on 21.7%). 

Brazil accounts for 11.4% of the fund, with India on 10.7% and the likes of South Africa, Mexico, Thailand and Hungary also in the portfolio. There’s around a 10th of the portfolio apiece in Samsung Electronics Co Ltd DR and Taiwan Semiconductor Manufacturing Co Ltd ADR. Meanwhile, the worst-performing fund, Halo Asia Growth, has lost around 18% over the five-year period.

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Our analysis of the Europe funds interestingly shows us one fund house that is on a winning streak, and one that was on a winning streak back in 2020. 

The Artemis SmartGARP European Eq I Acc GBP fund has returned around 135%, while the Baillie Gifford European Growth Ord trust, which has been hit by problems for some of its unlisted holdings among other issues, has lost 27%.

The UK gap again shows the SmartGARP effect, with Artemis SmartGARP UK Eq I Acc GBP returning around 120%. MI Chelverton UK Equity Growth B Acc has lost around 19%.

Much as the SmartGAARP approach is paying off, these results also point to the performance gap between large caps and their smaller peers in the UK market. 

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We do attempt to exclude dedicated small or mid-cap funds but the Chelverton fund does focus here. 

If we ignore the Chelverton fund, we end up with something like IFSL Marlborough Special Sits A Acc, which again acts as a generalist in theory but has a liking for small, mid and micro-cap shares.

It’s finally worth noting that the top and bottom-performing US equity funds are relatively unknown offerings, as far as DIY investors are concerned. 

There’s New Capital US Growth GBP Acc with its 123% return, and MS INVF US Growth ZHX GBP with a 13% loss.