Funds focused on North America stormed to the top of the performance tables in 2018, marking a dramatic turnaround on last year, according to FE Analytics.
In the nine months to the end of September, the IA North America sector accounted for 46 per cent of the top 50 best performing funds and 45 per cent of the top 100 funds, FE Analytics data showed.
This upswing followed a lacklustre period for the sector last year. Between April and December 2017, not one IA North America fund made it into FE's top 100.
The top performing fund was between January and September 2018 the Baillie Gifford American, which was comfortably ahead of the chasing pack with a return of 41.15 per cent.
Morgan Stanley US Growth came second, returning 32.34 per cent, followed by Fidelity Pan European, which returned 31.19 per cent.
Axa Framlington American Growth was the third North American fund to make it into the top 10 performers, ranking seventh with returns of 25.27 per cent.
The only other sector to be so heavily represented at the top of the performance chart was the IA Technology & Telecommunications, with four funds in the top 10.
Neptune Global Technology ranked fourth, returning 30.59 per cent, making it the top performer in that sector.
In total there were 11 funds in the IA North America sector in the top 20, with another two from the IA North American Smaller Companies sector.
Tanvi Kandlur, fund analyst at FE, said the recent domination by North America sector was down to above-trend growth, tax cut-stimulated robust earnings and strong business and consumer sentiment.
She said: "The US equity market has generally been less vulnerable to potential trade tensions compared to other developed economies. While US returns have largely been driven by a handful of tech stocks in previous years, this year the returns are coming from a variety of stocks in different sectors."
Ms Kandlur said a relatively weak US dollar dented returns in sterling terms in 2017, which explained why ̶ despite a strong upward year ̶ it wasn’t the strongest performing asset class.
|1||Baillie Gifford American||IA North America||41.15|
|2||Morgan Stanley US Growth||IA North America||32.34|
|3||Fidelity Pan European||IA Europe including UK||31.19|
|4||Neptune Global Technology||IA Technology & Telecommunications||30.59|
|5||Baillie Gifford Global Discovery||IA Global||30.34|
|6||Artemis US Smaller Companies||IA North American Smaller Companies||27.91|
|7||Axa Framlington American Growth||IA North America||26.86|
|8||Polar Capital Global Technology||IA Technology & Telecommunications||26.54|
|9||GAM Star Technology||IA Technology & Telecommunications||26.15|
|10||Axa Framlington Global Technology||IA Technology & Telecommunications||25.27|
But despite the recent surge in performance, FE data showed North America funds had not attracted any more attention from financial advisers.
Russ Mould, investment director at AJ Bell, said he was not convinced the performance in North America was coming from a wide enough group of stocks and sectors to avoid a large, sudden corporate casualty.
"In addition, market corrections (and we have not had one for a long time) tend to take place when three preconditions are in place," he said.
Mr Mould said these preconditions were rising interest rates, lofty valuations and earnings disappointments.
He said the first of these was definitely present, the second was a matter of "fierce debate" but the third definitely wasn't.
But Mr Mould warned analysts had upgraded their numbers throughout 2018, not cut them.
He said: "With the dollar and oil and interest rates going up, there are some greater challenges now to profit growth and this means the imminent Q3 reporting season could be particularly informative."