Mind the gap: the areas where fund selection matters

Saltydog Investor looks at how laggard portfolios have fared against the leading lights.

 

Saltydog was founded more than 15 years ago and our objective has not changed.

 

We provide data-led insights designed to help our members improve the performance of their investments.

Each week, we publish reports highlighting the best- and worst-performing sectors, along with a shortlist of the leading funds within each sector

We also run a couple of demonstration portfolios, which show how we are positioning some of our own money. We do not claim to cover every fund available, but our analysis includes most UK-domiciled funds offered by the main investment platforms.

Funds are first sorted into their Investment Association (IA) sectors.

These are then combined into our own Saltydog groups, based on historic volatility.

The least volatile sectors sit in the “Safe Haven” group, followed by “Slow Ahead” and “Steady as She Goes”. The most volatile equity sectors are split between the two “Full Steam Ahead” groups.

Specialist sectors are reported separately.

These groupings are designed to help our members manage the overall volatility of their portfolios.

 

Sector returns

 

Our primary focus is on sector performance. We believe that sustained sector trends tend to reflect underlying macroeconomic conditions and investor sentiment.

As a general principle, we promote selecting sectors first and then deciding which fund to invest in.

However, by concentrating on sectors and only ever looking at the leading funds, it’s easy to lose sight of how wide the performance spread can be within a single sector.

To address that, we have reviewed our data for 2025 and identified the best- and worst-performing fund in each sector.

 

 

(*There are a small number of bond sectors where we track only one or two funds. These have been combined into a single Global & Global Emerging Market Bonds sector.)

The table makes for some striking reading. Below, we look at the results one Saltydog group at a time.

 

Safe Haven

 

The Safe Haven group contains just two sectors: Short Term Money Market and Standard Money Market. Both are governed by strict rules around credit quality, duration, and liquidity, which keeps volatility low but also limits the differences in performance between funds.

As a result, the gap between the best and worst funds in these sectors remained narrow again in 2025.

 

Slow Ahead

 

The variance in performance was much more noticeable in the Slow Ahead group, which includes the bond and mixed-asset sectors.

The strongest returns came from funds in the Mixed Investment sectors, where exposure to equities helped drive gains during periods of market strength, but also made them more vulnerable when markets turned.

The best-performing fund, Artemis Monthly Distribution I Acc, rose by 23.1%.

Somewhat ironically, the worst-performing fund in this group came from the Targeted Absolute Return sector. Man Absolute Value Profl CX £ Acc fell by 5.1%.

Steady as She Goes

 

The Steady as She Goes group showed a broader range of outcomes.

The leading fund over the year was the Artemis SmartGARP UK Equity I Acc GBP fund, up 39.9%, from the UK All Companies sector. However, the WS Lindsell Train UK Equity Acc fund, from the same sector, ended the year down 7.1%.

 

Full Steam Ahead – Developed

 

There was an even larger variance in the Full Steam Ahead – Developed group.

The best-performing fund over the year was Artemis SmartGARP European Eq I Acc GBP with a 55.9% annual return. The abrdn Europe ex UK Equity A Acc fund, also from the Europe Excluding UK sector, fell by 5.3%.

The worst-performing fund in this group was the Morgan Stanley Global Brands Equity Income I Acc fund, from the Global Equity Income sector, with an annual loss of 7.4%.

Full Steam Ahead – Emerging

 

The leading funds from each of the five sectors in this group all made returns of more than 20%, and the best, Polar Capital Global Tech I GBP Hdg Inc rose by 43.0%.

Even the worst fund in this group, Schroder Asian Discovery Z Acc, went up, albeit only by 0.1%.

 

Specialist/Thematic

 

These sectors showed some of the widest performance spreads of all.

The standout fund over the year was SVS Baker Steel Gold & Precious Metals B Acc, up 184.9%, along with other gold-focused funds in the Specialist sector.

The WS Amati Strategic Metals B Acc fund, from the Commodities & Natural Resources sector, was also in the mix, up 162.1%.

 

Final thoughts

 

Many of the top-performing funds will be familiar to Saltydog members.

They have appeared regularly in our weekly shortlists and, in some cases, continue to feature in our demonstration portfolios. The weaker performers provide a timely reminder that sector labels alone do not tell the whole story.

Even within the same IA sector, outcomes can vary dramatically.

It is also clear that although funds from the more volatile groups can deliver better returns, there tends to be more variation within these sectors.

 

For more information about Saltydog, or to take the two-month free trial, go to www.saltydoginvestor.com