UK mid and small cap funds dominated the top performance charts in 2012, according to figures from Morningstar.
Fourteen of the top 20 funds are in either the UK All-Companies sector or the UK smaller companies sector, with the top performer being the Standard Life UK Equity Unconstrained fund.
The fund, which is managed by Ed Legget, has returned 42 per cent from 1 January to December 14.
Standard Life UK Equity Unconstrained was closely followed by Fidelity UK Smaller Companies and Neptune UK Mid-Cap funds, which have returned 40.5 and 39.4 per cent respectively.
Almost 94 per cent of funds produced a positive return in 2012, compared to around 20 per cent in 2011.
The strength in UK All Companies comes despite continued outflows from the sector. According to figures from the Investment Management Association, UK All Companies was the worst selling sector in October 2012 with outflows of £275m. The sector was the worst performing for the third consecutive month and has seen outflows for eight of the past 12 months.
Morningstar figures show the worst performing fund in 2012 was the SF t1ps Smaller Companies Gold fund, which has fallen 41.4 per cent. The fund was also the second worst performer in 2011 when it fell 42.5 per cent. The SF t1ps Smaller Companies Growth fund was the second worst performer in 2012 having fallen 34.5 per cent.
Peter Webb’s Webb Capital Management was appointed to manage the SF t1ps Smaller Companies Gold and Smaller Companies Growth funds in May 2012.
The IMA UK small companies sector was the best performing sector in 2012 with the funds producing an average return of 21.1 per cent. European Smaller Companies was second with a return of 20.7 per cent.
The IMA UK Index-Linked Gilts sector was the worst performer in 2012 with the average fund losing 0.7 per cent. The same sector was the best performer in 2011 returning an average of 21.3 per cent.