Morningstar research has identified 'unloved' equity categories that could benefit investors willing to take a contrarian approach.
Global Equity Income, UK Equity Income and European Large-Cap Blend Equity were the most unloved categories in 2018, according to the firm's analysis of fund-flow patterns.
By comparison, the most loved equity categories were Global Large-Cap Blend Equity and US Large-Cap Blend Equity.
The analysis, which involves investing equal sums in one fund from each of the three equity Morningstar Categories with the largest calendar-year outflows while avoiding those with the heaviest inflows, has demonstrated that investors who target the least popular areas of the market benefit when sentiment turns.
According to Morningstar, strong flows drive up stock prices, attracting more return-chasing investors and bidding up prices further.
Within the Global Equity Income category, Morningstar identified Veritas Global Equity Income and M&G Global Dividend funds as ones that could return to favour if markets are favourable.
The latter, managed by Stuart Rhodes, targets stocks that can achieve above-average dividend growth.
Valerio Baselli, senior editor Europe, Middle East and Africa (EMEA) at Morningstar, said: "Lead manager Stuart Rhodes applies a bucket structure that divides the portfolio into three core segments of stocks with different characteristics, which helps balance the portfolio, though the fund tends to be less stable than peers.
"Nevertheless, investors willing to accept this volatility have been served well over a full cycle."
According to Morningstar, the fund ranks in the top decile over the trailing three- and 10-year periods ended December 2018.
For UK Equity Income, Threadneedle's UK Equity Income Fund Retail Income, managed by Richard Colwell, was highlighted as one for investors taking a contrarian approach.
Mr Baselli said: "The fund's pragmatic approach to income investing and experienced manager inspire confidence that it can continue to reward investors over the long term.
"The investment approach aims to deliver a combination of capital growth and income, with an emphasis on the former."
Meanwhile, the MFS European Research fund and UNI-Global Equities Europe were named by Morningstar as ones to consider within the European Large-Cap Blend Equity category.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "All active funds go through periods of outperformance, and provided you have conviction in the manager then whether others love the fund or not should be of little consequence.
"Indeed investing against the direction of the herd, while uncomfortable, often proves to be the right approach."
Jenny Turton is a freelance journalist