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US funds have led long-term returns, but several European funds have outperformed over the past 6 to 12 months, signalling a shift in short-term momentum.
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Only 14% of US funds achieved top ratings, while nearly 60% underperformed - showing significant variation in quality.
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European funds showed stronger consistency, with 25% earning top ratings and several delivering standout 3 and 5-year returns.
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Top US performers benefited from tech and industrial exposure, while leading European funds focused on dividend growth and value.
US equity funds have dominated investor portfolios for much of the past decade, powered by strong returns from leading American companies - particularly across the technology sector. In comparison, European equity funds have often lagged behind, limited by slower economic growth and structural headwinds in key markets.
But recent performance trends suggest this gap may be narrowing. Over the past six to twelve months, several European funds have delivered standout results, outperforming their sector averages and, in many cases, surpassing the returns of their US counterparts.
In this report, we analyse the performance of 226 US equity funds and 123 European equity funds over 6-month, 1-year, 3-year, and 5-year periods. We identify the funds that have consistently ranked among the top performers in their sector - and highlight where investors have seen the most reliable results across different timeframes.
European & US Equity Funds Performance Summary
As part of this report, we analysed the performance of all 226 US equity funds in the IA North America sector and all 123 European equity funds in the IA Europe ex UK sector. We assessed each fund’s returns and sector ranking over the past 6 months, 1 year, 3 years, and 5 years. Every fund was then assigned a Yodelar performance rating based on how it ranked relative to others in its sector across these key timeframes.
Of the 226 US equity funds reviewed, 32 received a 4 or 5-star rating, reflecting consistent outperformance over multiple periods. However, 134 funds – accounting for 59.2% of the sector – were rated 1 or 2 stars, indicating that the majority have delivered results below the sector average across several timeframes.
The European equity sector produced a slightly higher proportion of top-rated funds. From the 123 funds analysed, 31 (25.2%) achieved a 4 or 5-star rating, while 79 funds (64%) received a 1 or 2-star rating – underlining the extent to which long-term underperformance remains common across this sector.
These findings highlight how only a small number of funds in each sector have delivered consistently strong results, while the majority have failed to outperform over time.
Both sectors showed a notable disparity between the best and weakest performers. European equity funds had a marginally higher proportion delivering above-average results, but the difference was modest. These findings highlight the importance of careful fund selection, regardless of whether investing in the US or Europe.
The table above provides the average annual performance of each sector. It highlights the fluctuations in average returns and the level of volatility experienced under different market conditions.
5 Top Performing North American Equity Funds
North American equity funds give access to some of the world’s largest and most innovative companies, especially in the US. These funds typically invest across key sectors such as technology, financials, and consumer goods - areas that have been central to global market growth in recent years. While this region has delivered strong long-term returns, performance among individual funds has varied considerably.
In this section, we highlight five of the best-performing North American equity funds that have outpaced their peers over 6-month, 1-year, 3-year, and 5-year periods. Each has demonstrated sustained strength across different market environments and has been recognised as a top performer within its sector.
Each of these funds has been awarded a top 4 or 5-star rating based on its performance relative to sector peers.
1. Alger Focus Equity Fund
The Alger Focus Equity fund aims to deliver long-term capital growth by investing in a concentrated portfolio of around 50 US equities. Its strategy employs in-depth fundamental research to identify companies with promising growth potential, regardless of their size.
The fund has delivered outstanding performance across all key timeframes. Over the past six months, it returned 4.05%, ranking 6th out of 231 funds in its sector and significantly outperforming the sector average of –5.52%. Its one-year return stood at 25.69%, well ahead of the 3.66% average. Over three years, the fund gained a remarkable 106.50%, ranking 1st out of 218 peers. Across five years, it returned 119.88%, placing it firmly within the top five of its peer group and far above the sector average of 75.27%.
Managed by an experienced team, the fund’s high-conviction approach has benefited from exposure to large-cap innovators such as Microsoft, NVIDIA, Meta Platforms, and Amazon. These holdings have made a substantial contribution to performance amid the boom in artificial intelligence and digital transformation.
The post-pandemic low interest rate environment, strong corporate earnings, and resilient US economic data have further supported returns. Together, these factors have helped position it among the top-performing North American equity funds in recent years.
2. BlackRock US Dynamic Fund
The BlackRock US Dynamic Fund seeks to provide a return on investment over five years or more. At least 70% of the fund’s assets are invested in companies incorporated in, or listed on, US stock exchanges. Its flexible strategy allows the investment team to target either undervalued companies or those with strong growth potential, depending on market conditions.
With approximately £220 million under management, the fund has produced solid results across all periods analysed. Over the past six months, it returned -1.03%, while negative but still well ahead of the sector average of minus 5.52%. Its one-year return of 6.59% was nearly twice the average of 3.66%. Over three years, the fund achieved 42.26%, placing it in the upper half of its peer group. Over five years, it delivered a return of 95.44%, ranking 35th out of 193 funds and comfortably above the sector average of 75.27%.
The fund’s consistent outperformance has been supported by diversified exposure across the technology, communication services, healthcare, and financial sectors. Its ability to shift between growth and value strategies has helped it adapt to changing market cycles. This flexibility has proven valuable in delivering steady returns during periods of both market strength and volatility.
3. CT North American Equity Fund
The CT North American Equity 2 Fund is actively managed by Columbia Threadneedle and holds approximately £384 million in assets. It is designed to achieve long-term capital growth with the potential for income by investing primarily in North American equities. At least 80% of the portfolio is allocated to companies that are either listed in, headquartered in, or derive a significant portion of their revenue from the US or Canada.
The fund has delivered consistently strong returns across multiple timeframes within the IA North America sector. Over the past six months, it returned –2.81%, a notable result relative to the sector average of –5.52%. In the last year, it gained 9.65%, more than double the sector’s 3.66% return. Over three years, it grew by 51.06%, putting it in the top 25% of its peers, and over five years, it returned 102.75%, ranking 16th out of 193 similar funds.
Such consistent outperformance reflects a well-executed and focused investment strategy. The fund’s returns have been driven by high-conviction positions in blue-chip US companies, including Microsoft, Apple, Amazon, Meta Platforms, and NVIDIA. These firms have generated resilient earnings and maintained leadership in high-growth areas such as artificial intelligence, cloud computing, and digital consumer services.
4. iShares S&P 500 Financials Sector ETF
The iShares S&P 500 Financials Sector ETF aims to track the performance of an index composed of U.S. financial sector companies, as classified by the Global Industry Classification Standard (GICS). With approximately £1.95 billion in assets under management, the fund offers direct exposure to some of the leading financial services firms in the United States, including banks, asset managers, insurers, and fintech companies. It uses a full physical replication strategy, holding the same companies in the same proportions as the index it follows.
Over recent years, the fund has delivered robust returns, consistently ranking amongst the top-performing US equity funds. In the past six months, it returned –1.70%, significantly ahead of the sector average of –5.52%. Its one-year return reached 18.44%, placing it 9th out of 227 peers, compared to the sector average of 3.66%. The longer-term picture reinforces its track record - over three years, it gained 50.99% versus a sector average of 37.54%, and over five years, it returned an impressive 122.48%, ranking it in the top third among 193 sector peers.
The fund’s performance has been driven by major holdings such as Berkshire Hathaway, JPMorgan Chase, Visa, Mastercard, Bank of America, and Goldman Sachs. These companies have benefited from rising interest rates, favourable credit conditions, and steady consumer demand.
5. iShares S&P 500 Industrials Sector UCITS ETF
The iShares S&P 500 Industrials Sector UCITS ETF is designed to replicate the performance of U.S. industrial companies as classified under the Global Industry Classification Standard (GICS).
It tracks the S&P 500 Capped 35/20 Industrials Index, which includes companies across aerospace, defence, transportation, manufacturing, electrical engineering, and infrastructure.
With approximately £359.26 million in assets under management, the fund uses a full physical replication strategy, mirroring its benchmark’s holdings and weightings.
In terms of performance, the fund has demonstrated reliability and competitiveness. Over the past six months, it posted a gain of 1.56%, outpacing the sector average of –5.52%. Its one-year return stood at 12.45%, securing 14th place among 227 peers. Over three years, it returned 54.45% compared to the sector average of 37.54%, while its five-year return of 112.15% ranked 7th out of 193 funds within the IA North America sector.
The fund’s recent outperformance reflects renewed capital spending and a broader industrial rebound in the US economy. Sectors such as construction, logistics, and manufacturing have seen increased activity, boosting demand for industrial equipment and services.
Key holdings like GE Aerospace, Uber Technologies, RTX Corporation, Caterpillar, and Boeing have played a major role in driving returns. These companies have benefited from government-backed infrastructure programmes, resilient transport demand, and advances in automation and aerospace technologies.
5 Top Performing European Equity Funds
European equity funds give investors access to some of the continent’s most established and reliable companies. These include businesses across sectors such as consumer goods, healthcare, financials, and manufacturing.
From our analysis of 123 European equity funds, 31 achieved a top 4 or 5-star Yodelar rating. These funds have consistently ranked among the best performers in the IA Europe ex UK sector over the periods analysed.
The table above highlights 5 of the top-performing European equity funds. Each has delivered competitive returns over 6 months, 1, 3 and 5 years.
1. iShares EURO Dividend UCITS ETF
The iShares Euro Dividend UCITS ETF aims to replicate the performance of an index composed of 30 leading dividend-yielding stocks from companies based in Eurozone countries. With €1.06 billion in assets under management, the fund offers access to some of Europe’s most reliable income-generating businesses.
It has delivered consistently competitive returns across all measured periods. Over the past six months, the fund returned 32%, ranking 1st in the IA Europe ex UK sector, well ahead of the sector average of 12.14%. Its one-year return of 31.27% placed it 2nd out of 123 funds. Over three years, it achieved a cumulative return of 48.56%, outperforming the sector average of 39.68%. Its five-year return of 71.69% also stood well above the sector average of 57.3%.
The fund’s appeal lies in its focus on income-producing companies across Europe’s most established markets. This strategy has proven effective during periods of inflation and economic uncertainty, offering investors reliable income and a defensive buffer. Its portfolio is tilted toward sectors such as utilities, financials, consumer discretionary, and industrials—areas known for steady cash flows and operational strength. With key holdings in Eurozone economies like the Netherlands, France, Germany, and Italy, the fund also benefits from broad geographic diversification.
2. Artemis SmartGARP European Equity I Acc
The Artemis SmartGARP European Equity I Acc fund targets long-term capital growth by investing in under-appreciated European companies outside the UK. It follows a quantitative strategy using an in-house screening system to identify businesses with improving fundamentals - such as rising earnings and analyst upgrades - while still offering attractive valuations. This data-driven strategy is designed to support disciplined, consistent decision-making across varying market conditions.
The fund has delivered outstanding returns across all timeframes. Over the past six months, it returned 31.70%, ranking 2nd out of 124 funds in its sector. Its one-year return of 33.08% topped the sector, placing 1st out of 123 and well above the 8.62% average. It maintained this momentum with a three-year return of 98.69%, again ranking 1st, and a five-year gain of 137.46%, placing 2nd out of 115 and more than doubling the sector average of 57.3%. These results underscore the fund’s consistent outperformance and place it among the top-performing European equity funds.
A key factor behind this success is the fund’s regional diversification and timely allocation to sectors such as financials, industrials, and other cyclicals. These areas have benefited from rising interest rates and Europe’s economic recovery. Its systematic investment process has enabled the fund to identify opportunities efficiently and navigate changing market dynamics.
3. WS Ardtur Continental European Fund
The WS Ardtur Continental European fund is an actively managed strategy focused on achieving long-term capital growth by investing in listed companies across continental Europe. While its core focus is on equities, the fund retains the flexibility to invest in government bonds, fixed-interest securities, and preference shares when suitable. Its objective is to outperform the MSCI Europe ex UK Index (GBP), after costs, over any five years.
Managing around £334.56 million in assets, the fund has produced superior returns across all measured periods. Over the past six months, it achieved a return of 23.63%, ranking 6th out of 124 funds, nearly double the sector average of 12.14%. Its one-year return reached 20.55%, placing it 10th among 123 peers. Over three years, the fund posted a cumulative gain of 65.22%, ranking 3rd out of 122. Most notably, its five-year return of 138.82% secured the top spot out of 115 funds, making it the best performing fund in the IA Europe ex UK sector.
The fund’s outperformance stems from a disciplined value-investing approach that targets European firms with solid earnings profiles and compelling valuations. It has gained from allocations to sectors that have responded positively to Europe’s economic upswing, notably financials, energy, and industrials. Core holdings such as Shell, Orange, Ericsson, Commerzbank, and Deutsche Bank have played a significant role in boosting returns.
4. JPM Europe Dynamic Ex UK Fund
The JPM Europe Dynamic Ex UK fund is designed to achieve long-term capital growth by investing predominantly in European equities outside the UK. It employs a flexible, style-neutral approach that combines bottom-up stock selection with quantitative analysis to identify high-conviction opportunities across the European equity market, with minimal restrictions on sector or market capitalisation.
Its performance has been competitive over multiple periods. Over the past six months, it returned 20.16%, ranking 12th out of 124 funds. Its one-year return of 14.86% comfortably surpassed the 8.62% sector average. Over three years, it achieved a cumulative gain of 53.43%, ranking 19th out of 122, while its five-year return of 82.80% significantly outperformed the sector average of 57.3%.
The fund’s returns can be credited to its focused allocation in high-performing sectors such as banking, pharmaceuticals, biotechnology, and technology services. Its geographic emphasis, particularly on German and French companies, has also contributed meaningfully to performance. Notable holdings like SAP, Allianz, Novartis, and Roche have helped enhance the fund’s resilience in volatile markets.
5. Waverton European Dividend Growth Fund
The Waverton European Dividend Growth Fund aims to deliver long-term income and capital growth. Its strategy centres on selecting European companies with the potential to grow dividends consistently over a rolling three- to five-year period.
Its performance has remained consistently positive across both medium- and long-term timeframes. Over the past six months, the fund returned 16.89%, ranking 21st out of 124 funds. Its one-year gain of 17.74% placed it 13th out of 123, well ahead of the sector average of 8.62%. Over three years, the fund delivered 62.55%, ranking 5th out of 122, and its five-year return of 93.92% earned it 5th place out of 115, notably above the sector average of 57.3%.
These outcomes reflect a disciplined and structured investment process. The fund follows a long-only strategy, concentrating on large- and mid-cap European companies listed on regulated markets, with a particular focus on those viewed as undervalued. Its emphasis on bottom-up stock selection and dividend growth has enabled it to maintain a resilient position across changing market conditions.
Improved economic indicators across Europe, along with a supportive fiscal backdrop, have further reinforced investor appetite for income-generating equities, which aligns closely with the fund’s approach.
Understanding Context Is Essential in Fund Selection
While US equity funds have long formed the backbone of global portfolios, recent trends show that several European strategies are now delivering stronger results - particularly over shorter timeframes. This shift underscores the value of maintaining a globally diversified portfolio and avoiding assumptions based solely on past regional dominance.
Yet the findings from this report go deeper. In both the North American and European equity sectors, only a small proportion of funds have delivered consistent outperformance across multiple periods. The majority continue to underdeliver relative to their sector, highlighting the challenge investors face in selecting funds that truly stand out.
Past performance remains a valuable reference point, but only when assessed within the right context. A fund’s historical returns can reveal how it has navigated different market cycles - but performance alone is not a strategy. What matters is how each fund complements the broader portfolio and whether it contributes to a well-structured, risk-managed approach.
This analysis reinforces a simple truth: data is most effective when it drives better decisions. And in fund selection, those decisions must be made as part of a clear and disciplined investment framework.
Oversight and Structure Matter
Even with access to detailed performance insight, long-term success depends on how portfolios are managed over time. Regular reviews are essential - they allow investors to identify inefficiencies early and ensure that their holdings remain aligned with changing objectives and market conditions. But without the right management structure in place, the ability to act on those insights can be limited.
The way a portfolio is managed - whether on an advisory or discretionary basis - directly influences how quickly and effectively changes can be implemented. Discretionary investment management, when aligned with client goals, enables timely portfolio adjustments without needing prior approval, helping investors remain on course through both stable and volatile market conditions.
Following Yodelar’s merger with MKC Wealth, our clients can benefit from portfolios managed by MKC Invest, a discretionary fund management firm within the MKC group. This structure ensures that changes can be made promptly, without requiring client-by-client approval, keeping portfolios aligned and actively managed based on evolving conditions.
For investors unsure whether their current portfolio still fits their needs, a review can provide essential clarity. Through our partnership with MKC Wealth, you can request a free portfolio analysis and receive tailored insights into your existing holdings - helping you identify whether better-performing alternatives are available.
Because in today’s investment environment, success comes not just from selecting good funds - but from having the oversight, structure, and decision-making process to ensure they keep working for you.
