This compared to just six in Q4 last year and the all-time low of three in Q3 2022, Columbia Threadneedle’s Multi-Manager Fund Watch survey revealed.
However, the 1.8% of top performing funds in Q1 still sat below the historical average range of between 2% and 4%.
Nevertheless, the survey revealed improvement across the board, with the number of funds with above average returns across the last three years growing from 82 funds (6.7%) in Q4 2022 to 136 funds (10.8%) in Q1 2023.
The survey showed that the IA UK Smaller Companies sector had the highest proportion of top performing funds, with 8.7% achieving consistently top quartile returns. It also delivered the highest percentage of above average returns (19.6%).
This was followed by the IA Europe ex UK sector, with 5.4% of funds consistently achieving top quartile returns.
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In contrast, the IA Emerging Markets and IA Sterling Corporate Bond sectors both failed to see any funds achieve consistently top quartile returns, making this the fourth quarter in a row for the latter sector.
However, all 12 main Investment Association sectors contained funds that consistently achieved above average returns.
Growth in sectors
Looking to all IA sectors, 46 of the 57 made positive ground, with the Indian and Healthcare sectors losing out most last quarter with a 5.5% and 4.6% drop, respectively.
The IA Technology and Telecoms sector came out on top, growing 15.3%, while the IA Europe ex UK sector grew 7.6% and the IA Europe Inc UK sector grew 7%.
UK bonds also saw strong returns, with the IA UK Index Linked sector growing 5.2%.
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Kelly Prior, investment manager in the multi-manager team at Columbia Threadneedle Investments, said despite a rise in funds achieving “rolling consistency” in the quarter, “the number still remains low and below the historical average range”.
She noted there was no dominance in style of investing when looking at the “constituents of the funds in the top performing quartile list.”
Prior continued: “We are entering a period of lower economic growth with higher cost of capital and inflation.
“This undoubtedly will bring with it both winners and losers across different sectors, but also within every sector as the stronger players gain market share. Understanding the fundamentals of companies and investments has rarely been more important, or interesting.”
