During the first quarter of 2004 the IMAs UK all companies category led the way against its peers in terms of new cash coming in. But figures from the IMA show that over the same period this year, the sector saw more money flowing out than coming in, making it the worst- performing category in terms of net retail sales.UK all companies was the best net retail seller in the IMA stable from 1995 to 2001 inclusive but after the TMT bubble burst, growth dropped dramatically from favour and value took over as the preferred investing bias. UK all companies arena with over 300 funds has become by far the most bloated IMA category. Its nearest rival, with around 160 funds, is glo- bal growth. Arguably, the most diverse IMA category in terms of the variety, UK all companies is populated by trackers, ethical portfolios, focus funds as well as large and mid- cap vehicles. As a result of the contrasting styles, fund performance can be misleading and the IMA has not ruled out the possibility of a fur- ther division of the category. But recently, SG Asset Management head of UK equities Hugh Sergeant set out a debate in Money Marketing that growth stocks are on the comeback, spurred on by what he felt was a declining attraction of value and increased availability of cheaper-looking growth stocks. Jason Britton, fund mana- ger for multi-manager specialist T Bailey urges against getting caught up on the debate of value versus growth but the key is looking for fund managers who can deliver in all market conditions. He says: The outlook is improving but as far as the UK all companies sector goes, I think as a sector it suffers from a lot of funds which do not perform well. However, there are many good vehicles to be found. Britton cites Rensburg UK select growth managed by Mark Hall, Artemis UK growth, Saracen growth alpha and the Investec UK value fund managed by Alastair Mundy as favoured portfolios. If growth really is back, Mundys fund should be struggling but this is not the case good funds will perform in all weathers, adds Britton. Bates senior investment manager Paul Ilott believes it is difficult to talk about UK all companies funds without mentioning the alternatives of UK equity income. He says: Value-driven in-vesting has delivered over growth in recent years and this has sent investors away from UK all companies funds towards UK equity income portfolios. But Ilott notes that over the past few months growth-orientated stocks are making a comeback, according to many fund managers. Ilott says: What we have seen is that price/earnings ratios have been compressed. For example, five years ago. p/e ratios on growth stocks were sky-high but now there appears to be little difference between growth and value. In light of this, investors should not expect value investing to necessarily retain its appeal over growth. Investors should be putting more growth into their portfolios while still maintaining a balance of value. A defining characteristic of the past five years has been the profitability of small and mid-cap investing over large cap which clearly has had a negative impact on the large-cap bias of the UK all com-panies sector. If growth really is set to make a significant comeback, Ilott feels that UK all companies sector should expect to have better days but he stresses that investors will want to see better performance first. Over five years to April, the UK all companies sector has seen a negative average of -2.9 while UK equity inc- ome has delivered 25.2. In terms of what is available in the melting pot which is the UK all companies, Ilott says he looks for something which can bring something different, such as Cazenove UK growth and income, which is mainly a large-cap-orientated fund. He also cites Merrill Lynch UK, again predominantly large cap and, along with Britton, he likes Rensburg UK select growth. He says: This is what I call a freedom fund the manager has no constraints on what he can do and it has fairly low volatility compared with its peers. Rensburg UK select growth manager Mark Hall believes it is a dangerous game to oversimplify the debate of growth versus value. Currently, he can find suitable buys in both fields but he warns that there are overvalued stocks in each. He says: The reality is that there are interesting situations to be found in the small and mid-cap regions of the FTSE but it is still a stockpickers market. You cannot close your eyes to any area. However, he agrees that p/e ratios have tightened between value and growth. He adds that he is now finding some value in the TMT field. He says: For five years, I had no tech in the fund but last summer I found very suitable stocks to buy in this area. In technology, stocks have been overvalued for so long but now they have come back to more realistic figures. In those areas of the market which have a growth tag, there are good buys to be found. Vodafone is currently trading on 8 per cent free cashflow yield which is an incredible turn-round from five years ago.