Top 5/Bottom 5: UK Smaller Companies funds

After a difficult 2011, the UK stock market recovered strongly last year with the FTSE Small Cap Index, in particular, up 25.2 per cent

The success of this volatile sector, which outperformed its large cap counterparts, has been attributed to increasing investor confidence as the economy shows signs of recovery. Despite many pointing to stagnating macroeconomic figures amid concerns that the UK economy could return to recession, some of its smaller companies are succeeding.

Whether UK small caps can continue to outperform this year is still up for debate, though many in the sector say increased merger and acquisition activity, price discounts and continued global exposure indicate continued prosperity.

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In the past 12 months, the average IMA UK Smaller Companies fund returned £1,243 on an initial investment of £1,000. This is higher than the IMA UK All Companies fund average return which stands at £1,166 in the previous year.

The best performer is the F&C UK Smaller Companies 3 fund, which returned £1,531. At the bottom is SF t1ps Smaller Companies Growth, a fund that has struggled for several years now and returned just £660 in the past 12 months.

Top 5/Bottom 5 UK Small Company funds
Top 5
F&C UK Smaller Companies 31,531
Fidelity UK Smaller Companies 1,447
Fidelity UK Smaller Companies1,446
FF&P Small Cap UK Equity 1,441
FF&P Small Cap UK Equity1,432
Bottom 5
CF JM Finn UK Smaller Companies1,068
CF JM Finn UK Smaller Companies1,068
Close Special Situations 1,012
Close Beacon Investment 1,004
SF t1ps Smaller Companies Growth 660
Figures as at 14 January 2013. Source: Morningstar