IF YOU are looking for a fund to invest next year’s Isa allowance in, chances are you will turn to an investment platform to help you make your decision.

According to research from online portal Willis Owen actively managed funds are likely to be your best bet, with those that blend a manager’s stock picks dominating the performance league table of open-ended and unit trust funds over the last three and five years.

Indeed, the platform said the top 10 actively managed funds “delivered significantly superior average performances” of 100 per cent and 143.9% respectively over three and five years.

The top 10 in the three-year league table included three Brazilian funds, three Russian funds, one investing in Brazil, Russia, India and China, one in world mining and one in global technology.

The five-year table, meanwhile, was dominated by funds that invest either in global technology or, geographically, in India.

Noting that index-tracking passive funds “account for just two of the top 50 performers over both three and five years”, Adrian Lowcock, head of personal investing at Willis Owen, commented: “Passive [funds] do have their place in portfolios but investors are generally better off in good active funds.”

He added: “Identifying the winning stock-pickers is also difficult, of course. To do this, investors should look for managers who have proven their abilities to add value and who have strong robust investment philosophies and repeatable processes.”

Despite this, passive funds now account for £181 billion of UK investor assets, the equivalent of 16%.

Robin Powell, a financial educator who blogs as the Evidence-Based Investor, said they stand as good a chance of generating returns as active ones.

“It should come as no surprise that there are several active funds among the top performers,” he said.

“There are so many active funds to choose from that, simply by the law of averages, there are bound to be funds that have beaten the market, especially over short periods of times.

“The brutal truth is that no more funds outperform the market than you would expect from random chance. As research by Cass Business School and others has consistently shown, around 1% of funds beat the market over the very long term on a cost- and risk-adjusted basis, and they are all but impossible to identify in advance.”

He added that research that suggests otherwise is “regrettable”.

Alan Dick, a long-time advocate of passives who retires this week as principal of Forty-Two Financial Planning in Glasgow, said: “Several very detailed academic studies have suggested that it takes in excess of 20 years’ performance history to differentiate between luck and skill in fund managers.

“Given that the average manager stays with a fund for less than five years, and probably stays in the industry for little more than 20 years, the odds of finding the winners doesn’t look good.”

A recent report by BMO Global Asset Management claimed that “the average active fund has outperformed the average passive fund in three out of the five Lipper Global sectors, where comparison is made possible by the passive funds having had a 20-year track record”.

The PassiveWatch report also found a significant performance range between the best and worst performing passive funds, though only in some sectors, and it only cited last year’s figures.

It said: “For example, over just one year for the period ending 31 December 2018, the best and worst passive funds in the Lipper Global Equity US sector ranged between +9.8% and -11.1%.”

Rob Burdett, co-head of BMO’s multi-manager team, said the report underlined the importance of due diligence to identify the best active managers that can outperform passives significantly over the long-term.

He added: “Choosing the right managers and exposures in passive is also imperative, and passives can play an important role in reducing overall cost and adding diversification.

“Over any sensible investing period both active and passive can play a role at different times for different markets.”

Independent financial advisory business Chase de Vere said that as a rule it is a big advocates of indexed funds.

However, it warned that passive corporate bond funds need caution.

Ben Willis, head of portfolio management, said: “We believe that investors should avoid conventional passive corporate bond funds and instead select short-dated passive bond funds, which negate most of the risks as shorter dated bonds are less likely to default, or actively-managed fixed interest funds.”