Inside the best performing active and tracker funds this year

AJ Bell’s latest ‘Manager vs Machine’ report found that in some markets while actively managed funds prevailed, in most sectors they’re still struggling to justify their higher fees.

In further analysis, AJ Bell has gone under the bonnet to see which active fund and passive funds have performed the best, and what pushed them ahead of their peer groups.

Asia Pacific Ex Japan and Global Emerging Markets

Asia Pacific Ex Japan and Global Emerging Markets have both been driven by a very specific AI story, centred in just a few stocks, namely Samsung Electronics, SK Hynix and Taiwan Semiconductor Manufacturing Company (TSMC).

Markets have become exuberant about their chances of being AI ‘winners’ and it's driven a rally in South Korean and Taiwanese equities, both key markets in the two eastern sectors which has propelled them ahead of US and global markets so far this year.

The funds generating the highest returns here all have exposure to these three stocks.

For Asia Pacific Ex Japan, this included IFSL Marlborough Far East Growth and Royal London Asia Pacific ex Japan Equity Tilt Fund. Emerging markets was led by Carmignac Portfolio Asia Discovery FW and Fidelity Index Emerging Markets. Asia Pacific ex Japan active funds had their best period since the Manager versus Machine report’s debut in 2021, with 65% beating tracker funds.

The Far East Growth fund invests in around 50-70 stocks, categorised into one of four buckets: high growth, stable growth, cyclical growth or mature growth.

The team’s approach is designed to ensure the fund is invested in the companies with the strongest growth potential at each stage in the economic cycle and this process has seen it rank in the top 25% of all of its ilk for the past decade.

Carmignac Portfolio Asia Discovery FW came in the top five across one, three, five and 10 years. In the first half of 2026, it had a total return of almost 67%, threefold the passive counterpart.

It has a bias towards small and mid-cap stocks and a pronounced ESG lens, investing at least half the fund in stocks aligned with the UN’s Sustainable Development Goals.

Out of the tracker funds, the Fidelity fund just pipped the top spot, taking it by 0.01%.

Japan

In Japan, Fidelity Index Japan and Invesco Japanese Smaller Companies (Acc) fund led the pack.

The Fidelity Index Japan tracks the MSCI Japan benchmark, which measures the performance of the market’s large and mid-sized stocks.

This is the opposite end of the Invesco fund, which, as its name suggests, covers companies at the lower end of the market cap scale.

The Invesco fund’s philosophy is to ‘buy small today but big tomorrow’, investing in companies at the start of their longer growth journey and generating returns as they move into the mid-cap sphere and beyond.

They put a big emphasis on face-to-face meetings with companies, a dynamic of corporate governance practices in Japan which have become more common and desired by shareholders after years of government led reforms, which has made the Japanese market a more accessible place for overseas investors.

The Invesco fund has benefitted from the rally in Japanese small caps the past few years, but looking at longer time frames, you can see when it was out of favour with the market. Over the past five and 10 years its performance has flipped, still making positive returns, but coming in at the lower end of the IA Japan sector.

Europe Ex UK

Premier Miton European Opportunities (Acc) and abrdn European Equity Tracker (Acc) led the European sector.

This year, the market has been at the blunt end of the Iran-related energy crisis and rising concerns about inflation as a result. But the Premier Miton fund cut through that to deliver over 20% for investors each year.

The fund can invest in any sized firm, but the managers favour mid-caps, focusing on ‘quality’ and valuations.

This sort of approach has certainly not been easy in recent years. Zooming out over a decade, most of its outperformance was generated pre-2021, after which point the market leaned towards more value-focused funds.

The abdrn tracker follows the MSCI Europe ex UK index, which leads the fund to own large and mid-cap stocks. The European indices are some of the least concentrated equity markets, especially when compared to the US or EM, so the fund’s returns are generated more broadly.

Global and US

The story of US equities is often mirrored in global markets, because the US makes up such a huge part of it. The MSCI All Country World Index – the industry standard for global markets – is almost 64% US, and only one stock in the top 10, TSMC, isn’t headquartered there.

Both markets have been incredibly tough environments for active managers to outperform. Returns have been driven by a narrow collection of names, so tracking them had been an effective and cheap way to invest.

But with the AI and Iran related sell offs this year, managers who were diversified from the benchmark stood out, especially those not heavily weighted to the Magnificent Seven.

The Polar Capital Artificial Intelligence and Vanguard US Opportunities funds were the best performing Global and North America funds, respectively, and both are distinct from the benchmark.

The Polar Cap fund takes a deep research approach with three managers and a 12-person team. As a result, it’s taken a very deliberate and selective approach to the AI story for some time.

The Vanguard fund is also distinct from the Global and US indices, with top holdings in Micron, manufacturing firm Flex and the UK’s Xometry.

The Polar fund has had the highest returns across the sector over one, three, five and 10 years, while Vanguard has stayed within the top 13 of 226 global funds.

The tracker funds presented a bit of a surprise because the best Global fund wasn’t a ‘classic’ market-cap weighted tracker.

The UBS FTSE RAFI Developed 1000 Index is fundamentally weighted, meaning it selects stocks based on metrics such as revenue, providing a different benchmark to market-cap-weighted indices. This puts Intel, Samsung Electronics, Apple, JPM Chase and Amazon in its top five, missing Nvidia, Microsoft and TSMC here.

The highest returning North American passive fund was the Vanguard U.S. Eq Index £. It tracks the S&P 500 index and the fund's gains were driven primarily by the strength of the still dominant large-cap technology stocks movements. But being based in sterling gave it some distinction over other US dollar denominated funds as the greenback weakened.

UK

The SVS Zeus Dynamic Opportunities fund made the highest active returns, just over 16% in the first half of the year.

Launched in 2023, SVS Zeus has had a good run since its debut, mainly down to strong stock picking across the UK market. It has around a third of its assets in the FTSE 100 with 40% in the FTSE 250 and the rest in small and AIM stocks.

The fund is positioned very differently to its competitors. Its average peer has a weighting to financials of 21.7% but SVS Zeus Dynamic Opportunities has just 8.8%, opting for industrials as its main sector exposure.

On the tracker side, BlackRock’s iShares UK Equity Index follows a free-float-adjusted version of the FTSE All-Share, which only includes shares available for public trading rather than a company’s full issued share capital.

Although this does not materially alter its exposure relative to the benchmark, the fund was well placed to capture strong returns from the banking and energy sectors, two of the UK market’s standout performers over the period.