UK fund persistence: why yesterday's winners rarely repeat
- TEBI
- 1 day ago
- 6 min read
Updated: 2 hours ago
New figures on UK fund persistence show how rarely a top-ranked fund holds its place. Of the 80 sterling-denominated UK equity funds ranked in the top quartile at the end of 2021, three were still there four years later. Funds that began further down the table reached the top far more often.
The line Theodore Sturgeon is best remembered for began as a defence. Answering critics who judged science fiction by its worst examples, he argued in 1957 that 90 per cent of the genre was no good, and that 90 per cent of everything else was no good either. His point was that the surviving tenth of any field is worth finding, and that the best science fiction is as good as the best writing anywhere.
The idea has resurfaced lately in investing circles, where the wealth manager Barry Ritholtz has applied a corollary of it to financial products.
Which leaves the part Sturgeon did not have to address. If the useful move is to find the surviving tenth, the obvious question is whether it stays found. On UK fund persistence, the latest figures answer it.
What happens to the UK's best-performing funds
At the end of 2021, 80 sterling-denominated UK equity funds sat in the top quartile of their peer group. Four years later, three of them were still there.
The figures come from the Europe Persistence Scorecard: Year-End 2025, published by S&P Dow Jones Indices in May 2026. A year in, 18.75 per cent of the original 80 were still in the top quartile. By the end of 2023, 5.00 per cent. The figure was 3.75 per cent at the end of 2024, and 3.75 per cent again a year after that — the same three funds.
Lowering the bar does not rescue the picture. Of the 159 UK equity funds ranked in the top half at the end of 2021, 42.14 per cent were still in the top half after a year, 30.82 per cent after two, 19.50 per cent after three and 16.35 per cent after four.
A more recent cohort has the same shape: of the 73 UK equity funds in the top quartile at the end of 2023, 15.07 per cent held that ranking through 2025.
How the scorecard measures UK fund persistence
The scorecard is published once a year by S&P Dow Jones Indices. This edition, compiled by Tim Edwards, Davide Di Gioia and Euan Smith, carries data to 31 December 2025. The underlying fund data comes from Morningstar.
Funds are ranked into quartiles and halves at the start of a period on their trailing relative performance, then tracked forward to see what proportion of them hold that ranking.
The rankings are built without survivorship bias, which matters for how the results should be read: funds that later merge or liquidate are tracked as an outcome in their own right rather than dropped from the count, so the figures are not flattered by the disappearance of the worst performers. Every fund available to an investor at the point of decision is in the opening sample. Only one share class per fund is included, the one with the highest previous-period return, so no fund is counted twice.
The universe is actively managed funds domiciled in European markets, sterling-denominated for the UK categories. Index funds and leveraged funds are excluded, as are offshore European equity funds.
Yesterday's also-rans, today's leaders
The figures so far track whether a fund holds its ranking year after year. A second test of UK fund persistence asks something broader: where does a fund end up over a long stretch, compared with where it started?
The scorecard answers it by comparing two non-overlapping five-year periods — December 2015 to December 2020, then December 2020 to December 2025 — and recording how funds moved between quartiles. Each UK equity quartile starts with about 69 funds.
Of the 69 funds in the first quartile for the first five years, two were still in the first quartile for the second five. That is 2.90 per cent. Nearly half of the group, 46.38 per cent, finished in the fourth quartile.
There was more movement further down the table. Of the 68 funds that began in the third quartile, 32.35 per cent finished in the first. Those that began in the fourth quartile reached the first 18.84 per cent of the time.
Two funds held the top quartile across the two periods. Another 22 arrived in it from the third.
The same reversal appears when the field is cut in half rather than into quarters. Of the 137 UK equity funds in the top half for the first period, 32.12 per cent were in the top half for the second. Among the 137 that started in the bottom half, 42.34 per cent finished in the top.
None of this makes the funds that climbed better funds, or the ones that fell worse. The scorecard records relative position within a peer group over a defined window, not quality. What the UK tables show is how little of that position survives into the next five years.
Where the evidence is less clear-cut
Not every part of the scorecard points the same way, and it is one document within a much larger body of evidence on whether fund performance persists. This measures something different from the quartile transitions above: instead of tracking where funds end up over a five-year span, it tracks whether a fund holds top-half status in every one of several consecutive years. On that measure, persistence runs well ahead of chance at every horizon tested, and the scorecard's own highlights call the gap significant. Of the funds in the top half in 2021, 53 per cent were still there after two years, against a random expectation of 50 per cent. After five consecutive years the figure was 16 per cent, against 6 per cent — close to three times the random rate. Those are cross-category weighted averages for Europe rather than UK numbers, and they sit alongside, rather than overturn, the quartile findings above: annual top-half status persists better than chance would predict, while five-year quartile position mostly does not.
The report attributes them partly to market conditions rather than to manager skill. The same five-year stretch carried a sustained momentum tailwind in the underlying markets, with the excess returns of the S&P Momentum indices over their benchmarks strongly positive throughout, and funds tilted that way would have been carried along by it. Whether riding a market-wide trend counts as skill is a question the report raises and does not settle. Its own conclusion is that 'skills to navigate these trends successfully over the long term remain relatively rare'.
Two further limits are worth stating. The UK samples are small — each quartile in the five-year table starts from about 69 funds, so 2.90 per cent means two funds. The direction of travel is legible at that size. The decimal places are not. And the scorecard tests one kind of selection: picking funds on trailing rank. An investor choosing on cost, mandate or process is doing something these tables do not measure.
The tithe that won't hold still
Sturgeon was talking about books, and books hold still. A novel that was good in 1957 is good now. Find the surviving tenth of a field of finished objects and the job is done, because nothing in the pile moves once it has been sorted.
Funds are not finished objects. They are ongoing processes, with managers who leave, mandates that drift, assets that swell and conditions that turn. Sorting them produces a ranking, and the ranking starts to decay from the moment it is struck.
The proportion Sturgeon settled on is not the part that gives investors trouble. The trouble is the search. There is always a top quartile. It is rarely made of the same funds as the one before it.
Resource
S&P Dow Jones Indices. (2026). Europe Persistence Scorecard: Year-End 2025. S&P Global.
Choosing on something other than last year's ranking
If the tables in this article have prompted the question of what a fund should be selected on instead, TEBI's Find an Adviser directory is a place to start. Everyone listed has publicly committed to evidence-based investing, which in practice means building portfolios around cost, diversification and time in the market rather than around whoever finished top of a peer group last year.
For readers who would rather work through the thinking themselves first, How to Fund the Life You Want by Robin Powell and Jonathan Hollow sets out how to build a long-term plan. Bloomsbury published the second edition, and it is available on Amazon.
