MORE than 40% of small investors expect the FTSE 100 to be higher in six months' time, and just under two-thirds expect it to be higher in a year.

Sentiment is at its strongest since last December, according to a survey by Halifax, after investors shrugged off the October wobble in the market.

Financial stocks were favoured by 65% of investors last month, overtaking energy and mining on 61%. Consumer services and general industries stocks saw the biggest 12-month rise, both up around 22%.

Damian Stansfield, managing director of Halifax Share Dealing, said: "Investors appear to have been buoyed by the latest round of economic data and thoughts over the short-term prospects of the FTSE 100 have improved.

"As we move towards the year-end there will inevitably be an increase in speculation as to what 2015 will bring, but investors need to remain mindful of their long-term strategy and continue to do their own research."

For those who prefer to pay managers to do the research, private client investment and financial planning group Tilney Bestinvest has identified the top five fund managers based in ­Scotland as part of a report into the top 100 ­managers running equity funds available to retail buyers.

The report looked at the entire career history of fund managers, and ranked them on a blend of ­average monthly outperformance and a "confidence score" based on the statistical probability that their success was due to skill rather than luck, and with a weighting to ­recognise length of track record.

Topping the list is Edinburgh-based Angus Tulloch, head of Asia Pacific equities at First State Stewart (FSS), part of First State Investments - and, incidentally, the most vocal supporter in the financial sector of the Yes campaign.

The others in the top five are Ed Leggett and Thomas Moore at Standard Life Investments, who manage SLI's unconstrained UK equity and equity income funds; Anthony Cross and Julian Fosh, who run ­Liontrust's high-flying UK companies funds, and Blackrock's European ­specialist, Alister Hibbert.

Jason Hollands, managing director at Tilney Bestinvest, said: "Investors need to be very selective when choosing active fund managers as many simply do not deliver the goods over the long term."

Meanwhile, Baillie Gifford's Scottish Mortgage investment trust, which reported recently, has "deservedly established itself as a flagship of the industry", according to analyst Alan Brierley at ­Canaccord Genuity.

He said: "The long-term record is genuinely world class; over 10 years it is the best-performing UK-listed global fund. The ­Edinburgh-run trust's top 10 holdings include Amazon, Facebook, Google, Chinese online retailer Alibaba and search engine Baidu."

But Brierley warned that potential buyers should be alert for "more attractive entry points" than the current share price level.

With volatility showing signs of returning, Fidelity's Tom Stevenson noted: "In times of economic uncertainty, with almost zero cash returns, dividends afford an element of protection against equity market volatility and against inflation.

"Dividend-paying companies will also make a concerted effort to ensure a sustained pay-out to shareholders to avoid any possible reputational damage."

But he said: "If you were to look exclusively to the UK for income, this would limit both the stock selection and diversity of funds. Global funds generate income from as wide a range of sources as ­possible and do not restrict you to one region."

Stevenson pointed to another Scottish-managed fund, Aberdeen World Equity Income, where one of the team is Bruce Stout, manager of the Murray International investment trust. His other picks are Lazard Global Equity Income, Sarasin Global Higher Dividend, and the firm's own Fidelity Global Dividend Fund.

Stevenson said: "While dividend payments are attractive to income investors, remember that they are never guaranteed, there is always the risk of a cut. Make sure you look under the bonnet of each fund and familiarise yourself with the underlying companies."