Welcome to Asset Allocator, FT Specialist's newsletter for wealth managers, fund selectors and DFMs.

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Cream of the crop

Producing consistent, sustainable returns will always be top of the wish list for investment managers. But achieving that goal is easier said than done, particularly at times of market rotation. For asset allocators, the key is to balance a variety of approaches. Those running individual mandates, however, are to a degree dependent on the whims of market sentiment.

To that end: BMO’s latest FundWatch survey has found that just 20 of 1,085 funds were able to post top-quartile returns over a rolling three-year period to the end of the last quarter.

On top of that, just 103 of those funds were able to deliver returns above the median in each of the last three 12-month periods.

These qualities are relatively rare at the best of times – even in the three years to September 30 last year, only 191 funds beat the median requirement. Still, the renewed interest in cyclical shares has clearly had an impact where equity fund consistency is concerned.

There is one bright spot, however: a select group of US equity funds continue to stand out for their reliability, the past quarter included. Of the 20 funds that have maintained their consistency into this year, a quarter are US equity strategies. Another four are global equity funds - typically fairly reliant themselves on the US stock market.

For all the talk of the nascent shift away from tech, then, it’s the US active funds that are finding it easiest to steer through the noise.

Does the same ring true for discretionaries’ own US fund picks? Not quite: many of the most popular funds are racier strategies that have cooled off this year. But there are also some examples that do more or less fit the bill, like Artemis US Select. For those that do go down the active route, US fund selection is still unearthing some winners.