An Asset Allocator co-conspirator has shared with us the latest Fundwatch data from Columbia Threadneedle.

The team that compile this are led by Rob Burdett and his multi-manager colleagues, who were formerly at BMO Gam and, prior to that, more companies than word count enables to list. 

The team found that of the 1,286 investable funds in its universe in the second quarter of 2023, a grand total of just 27 of those, or 2.1 per cent of the total, have been top quartile for each of the previous three years. 

While this sounds like a small number, it actually represents an increase on the same period in 2022, when just four funds had that performance record. 

Perhaps the marmalade dropper from the data is that the UK Smaller Companies sector, lately about as popular with investors as one of my jokes, had the highest proportion of funds that outperformed - 10 per cent of the total number of funds.

The next-best performer was Japanese equity funds, with 7.4 per cent of the funds in the relevant Investment Association universe being top quartile for three consecutive years.  

Kelly Prior, part of the team at Colombia Threadneedle that compiled the data, said: "While economic growth trumped stubborn inflation and higher interest rates in the second quarter of the year, we are at multi decades of high interest rates in most major and minor economies of the world.

"It is generally accepted that it takes around 18 months for the impact of interest rates to have an effect on the real economy.

"As the first hike in the UK was in December 2021 and in March 2022 for the Federal Reserve in the US, investors should be thinking about when this will have an impact, and where."

A glance at our database reveals the the most widely owned UK Smaller Companies fund among the allocators we cover are run by a pair of boutique houses, with Tellworth UK Smaller Companies, run by the former Schroders duo of Paul Marriage and John Warren, owned by three of the allocators we cover.

It’s joined at the top of the charts by Chelverton UK Equity Growth. 

UK small companies funds seem to have been in the doghouse for longer than me with my ex-wife, but the spate of merger and acquisition activity that presently disrupts the sector may soon usher in a revival of investor interest in the asset class. 

david.thorpe@ft.com