In the battle of the manager versus the machine, humans have been punching above their weight with UK funds so far this year. In both the UK All Companies and UK Equity Income categories, the top 10 performers were dominated by actively managed funds.
Fund managers will be jumping for joy given the active fund industry has faced growing criticism over widespread sub-par performance.
Investors are increasingly turning to passive investments such as tracker funds and ETFs, finding them cheaper and more convenient. It’s incredibly hard for fund managers to beat their benchmark year in, year out and many people are happy to simply track the market. The challenge now for active funds is to sustain this year’s outperformance to date. That’s easier said than done.
| Top 10 best performing UK All Companies funds year-to-date | ||
| Fund | Type | Total return |
| SVS Zeus Dynamic Opportunities | Active | 28.4% |
| Artemis SmartGARP UK Equity | Active | 27.7% |
| Ninety One UK Special Situations | Active | 23.4% |
| Dimensional UK Value | Active | 22.6% |
| Artemis UK Select | Active | 22.1% |
| Brompton UK Recovery | Active | 20.6% |
| First Trust United Kingdom AlphaDEX ETF | Passive | 20.5% |
| Invesco FTSE RAFI UK 100 ETF | Passive | 19.8% |
| Redwheel UK Climate Engagement | Active | 19.5% |
| Invesco UK Enhanced Index | Active | 19.1% |
| FTSE All-Share (benchmark for UK stock market) | 16.6% | |
| Source: AJ Bell, FE Fund Analytics. Total return data 1 January to 30 September 2025. | ||
Great year for UK stocks
Fund managers have enjoyed a favourable environment in 2025, with a decent showing across UK stocks in general. The FTSE 100 has just hit another new record high and some of the biggest stocks have delivered supersized rewards for investors. Ten stocks in the FTSE 100 have generated total returns above 50% year-to-date, half of which have more than doubled investors’ money since 1 January, including miner Fresnillo and defence group Babcock.
One might argue that anyone investing in UK equity funds, either passive or active, should be happy with performance over the past nine months whether their choices have beaten the market or not. Very few funds in the UK All Companies and UK Equity Income sectors have lost money for investors, and more than 100 have delivered double-digit returns including dividends.
Star performers
The scale of outperformance from certain funds is truly impressive. Investors who opt for active management typically pay higher fees than passive funds and they expect to be rewarded appropriately. Traditionally, they might deem a few extra percentage points as acceptable. This year, the best performing UK funds have been pouring the equivalent of liquid gold.
SVS Zeus Dynamic Opportunities has shown what’s possible with successful stock picking, delivering more than 11 percentage points of outperformance so far in 2025 compared to the FTSE All-Share. It has generated a 28.4% total return in just nine months – approximately three times as much as you might expect from UK investments in a whole year.
Managed by Caspar Trenchard, the Zeus fund has just over one quarter of its assets in FTSE 100 stocks, 38% in FTSE 250 names, 30% in small caps and the rest in cash. It’s a real stock picker’s portfolio rather than an index hugger.
Artemis SmartGARP UK Equity is another standout name and blends a mixture of managers and machines. An in-house computer system looks for stocks with certain characteristics, and the managers then sift through the menu of potential ideas for the cream of the crop. A 27.7% total return year-to-date would suggest it has hit upon a winning formula.
Scooping up dividends
On the UK Equity Income side, seven out of the top 10 best performers year-to-date are active funds. At the top is Barclays UK Equity Income, a multi-manager fund where Jupiter and Aberdeen each run parts of the portfolio.
The Barclays fund has returned 20.6%, a whisker above the top performing passive fund, while the iShares UK Dividend ETF has returned 20.4% from tracking an index made up of high-yielding stocks from the FTSE 350 index.
| Top 10 best performing UK Equity Income funds year-to-date | ||
| Fund | Type | Total return |
| Barclays UK Equity Income | Active | 20.6% |
| iShares UK Dividend ETF | Passive | 20.4% |
| L&G UK Equity Income | Active | 20.1% |
| Vanguard FTSE UK Equity Income | Passive | 20.1% |
| TM Redwheel UK Equity Income | Active | 19.7% |
| Redwheel UK Value | Active | 19.5% |
| VT Munro Smart-Beta UK | Passive | 18.8% |
| BNY Mellon UK Income | Active | 18.6% |
| Jupiter UK Income | Active | 18.4% |
| Janus Henderson UK Equity Income & Growth | Active | 18.3% |
| FTSE All-Share (benchmark for UK stock market) | 16.6% | |
| Source: AJ Bell, FE Fund Analytics. Total return data 1 January to 30 September 2025. | ||
Which funds have done poorly?
In the doghouse is fund manager Nick Train, whose Lindsell Train UK Equity fund has lost 2.7% year-to-date.
Already under fire for successive years of underperformance with his Finsbury Growth & Income Trust, Train’s status as one the last remaining ‘star managers’ is now open to question. He’s blamed poor performance on having large exposure to consumer brand owners that, in his words, have been ‘less reliable’ than expected, most notably Diageo.
There has been a shift in the Lindsell Train UK Equity portfolio towards digital-focused names but, so far, it’s not been enough to put the fund back on top. Investors have been patient, but to suffer a negative return in such a strong year for UK shares could be the breaking point for many of them.
