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Stay active: Fund managers that beat the UK markets

While passive investment strategies dominate the asset management business, some active fund managers are still able to significantly outperform the markets, a report by TD Direct Investing shows.

This week, the investment platform has published its list of the top 25 fund managers in the U.K. On average, these fund managers have achieved an average return of 7.9 percent per year to investors over 10 years, compared to 5.4 percent per year you would have earned from the FTSE All Share index.

"Active investing is very much alive," Michelle McGrade, chief investment officer at TD Direct Investing, told CNBC's Squawk Box. "[The list] also tells us that managers who have been investing for a very long time can outperform very well."

Man with target goals
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At the top of the list is Mark Slater, manager of MFM Slater Growth, which invests in mid- and small-cap U.K. stocks. His fund's annualised return came to 12.2 percent and outperformed the sector by 7.1 percent on average.

Another strong performer was star fund manager Neil Woodford, who was put in fifth place. His fund, CF Woodford Equity Income, achieved an annualised return of 9 percent.

Woodford appeared in the news earlier this week after announcing plans to scrap bonuses at his investment firm, as the company believed they did not improve employees' performance.

McGrade also explained what characteristics the 25 fund managers shared which might help to explain their ability to beat the markets.

"All of them have something very much in common and that is a passion in investment management. They have the skill and they have discipline," she said.

"They have a process and quite a few of them have different processes and are wedded to their various processes. They see markets go up and down and they don't panic."


The top 5 U.K. fund managers are

1. Mark Slater – MFM Slater Growth
2. Michael Lindsell and Nick Train – CF Lindsell Train U.K. Equity
3. Anthony Cross and Julian Fosh – Liontrust U.K. Smaller Companies
4. Francis Brooke – Troy Trojan Income
5. Neil Woodford – CF Woodford Equity Income

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