Using the Lipper Leaders scoring system to analyse the best-performing funds in the IA North America sector.
It’s a worrying time to be performing so well, with the IA North America sector up more than 40% over three years, and the top fund near quadrupling that.
But every silver lining has a cloud: over 2025, the US equity market was characterised by elevated valuations and mega-cap concentration. This is despite the aftermath of Liberation Day in early April, which saw significant market falls, and heightening unease over the dominant “US exceptionalism” narrative. April saw forward P/E multiples fall as earnings growth forecasts moderated in the face of tariff concerns. While the earnings outlook dipped, inflation expectations briefly spiked, pressuring rate-sensitive sectors.
But then, the sky did not fall onto the heads of Wall Street’s scurrying denizens, markets rebounded, and have—by and large—kept going.
However, those risks haven’t abated, as the very largest firms continued to drive the bulk of returns. There are seven companies now valued at more than $1 trillion. Volatility has remained elevated throughout the year.
Key risks include the persistence of inflation, keeping rates elevated. A change in Fed leadership in May could further stoke the former, as the president’s appointment will likely be considerably more dovish than the incumbent on rates. What’s more, this market concentration in a narrow set of mega caps has exacerbated the market’s sensitivity to policy and earnings news—recall, if you will, those fraught days in November, when the world waited with bated breath on Nvidia’s quarterly earnings, then heaved a collective sigh when they beat expectations.
Nevertheless, that concentration has paid off. For example, over three years to the end of November, a market cap-weighted S&P 500 index ETF had delivered about 56%, whereas an equal-weighted equivalent had returned about 21%.
The music continues to play; investors continue to dance. Nvidia’s strong earnings report in November put some more nickels in the juke box, and the consensus from investment bank analysts in December was rosy, with expectations that the rally would broaden out over the coming year, supported by tax cuts and increasing liquidity.
Personally, I remain sceptical—but I was this time last year, and the S&P laughed in my face and danced on. I’m reminded of the Powell and Presburger classic film, The Red Shoes, but it was a long movie, and it’s unclear as to how near the denouement we are. One market report, noting how Fed cuts would likely add fuel to the rally, advised its readers to “party like it’s 1998”—or even 1997, anticipating a lot more upside to the rally.
Given the factors driving returns in this market, it’s not surprising that the top funds are all large-cap growth, according to Lipper’s holdings-based style analysis. Indeed, one has to go to twenty-second place in the table before there is a break in large-cap growth (a mid-cap fund), and to twenty-fifth place to find a fund that isn’t growth by style.
It’s also not particularly surprising to see those funds dominating the top of the table being overweight the Mag Seven stocks or have strong tech—particularly AI—tilts in their portfolios. It’s noteworthy that the only fund on the top ten table now that was there last year is the Xtrackers MSCI USA Information Tech UCITS ETF—a passive vehicle. Also a tad odd it’s not in the IA’s tech sector, but we are where we are.
Given how narrow the range of stocks driving returns has been, it would be nigh on miraculous were this not to be the case. This has, of course, been the right call, and those invested in such funds will have little to complain about. Conversely, brave contrarians in the sector have been wont to find themselves in negative territory over the past 12 months.
However, one should also be aware that bets on the market leaders, good though they have been, are very concentrated. Fund managers have different incentives to their investors: if the benchmark plummets, they will have done well if they plummet, but less so. They have a pressure to stay in the dance, because of how their performance is measured. People tend to view the world somewhat differently when it’s their money, so there’s arguments in favour of diversifying away from the winning streak—even as that streak continues.
Table 1: Top-Performing North America Over Three Years (with a minimum five-year history)
All data as of November 30, 2025; Calculations in GBP
Source: LSEG Lipper
This article first appeared on p15 of the January edition of Moneyfacts.
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The views expressed are the views of the author and not necessarily those of LSEG Lipper. This material is provided as market commentary and for educational purposes only and does not constitute investment research or advice. LSEG Lipper cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. Please consult with a qualified professional for financial advice.
