Everyone wants to invest in the best funds – and a popular way to judge them is to see where they rank on the performance tables. The dream ticket is seeing them right at the top, having delivered double-digit returns to investors and leaving rivals flailing in their wake. However, an impressive outperformance – or even a period of underperformance – can be misleading unless you know the reasons. It’s far more important to understand how returns have been affected by factors such as market cycles, global growth, inflation and innovation in certain sectors.
In this article, we take a closer look at the 20 best-performing funds in 2025 from the Chelsea Selection, analyse why they have done well and outline the lessons learned. We’ll also examine the global market outlook for 2026, including the key opportunities and risks that are likely to be faced over the next 12 months.
Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and tax rules can change. Chelsea does not offer advice and so if you are unsure of anything please contact an expert adviser.
Identifying top funds
Let’s start with how to understand a fund’s performance. Although this may seem obvious, there are a few vital considerations. Top of this list is comparing it with a reference point. You may be impressed with a 5% return, but if similar funds have achieved 10%, then you’ll have less reason to celebrate.
A popular approach is to use a benchmark. This is best described as a market index – or group of assets – that reflects the type of investments you hold. For example, if your fund is focused on large-cap UK stocks, a sensible benchmark would be the FTSE 100 index. This contains the biggest companies listed on the London Stock Exchange.
It’s also worth highlighting the risks of chasing performance. You may be drawn to an area whose returns are soaring, but these times may be relatively short-lived – and not repeatable. That’s why the advice from investment gurus is to put your money into longer-term investments that can deliver more sustainable returns over at least five years.
We decided to examine the 20 best-performing funds in 2025 to understand why they performed so well and gauge whether this was sustainable. Our analysis was based on the total returns generated by funds in the Chelsea’s Selection (roughly 100 funds) rather than the full universe of more than 4,500 funds available in the UK, from the start of the year to 2 December 2025.
Current trends in fund performance
The world has certainly moved on during the past 12 months. In 2024, the focus was on returning to a normal environment, with stable interest rates and balanced portfolios. This year has been more about thematic bets, such as the need for global infrastructure improvements and megatrends such as artificial intelligence. There has also been more interest in geographical diversification. UK investors have added an extra £27.3 billion to the assets held in the IA Global sector, bringing the total to £236.1 billion*.
Precious metals, China and emerging markets are among the investment strategies in 2025 that worked well. This has been due to several reasons. The US dollar index fell 10.7% between the start of the year and September 2025, according to a report from RBC Wealth Management**. This helped create a positive environment for several sectors. The price of silver has reached record highs this year – even outpacing gold – and this has obviously helped some of the specialist metals funds.
Elsewhere, European companies have also performed well. Lower interest rates, valuations catching up, and earnings recovery are among the key factors.
The role of growth stocks
It’s fair to say that both value and growth stocks have performed well in 2025, with growth being dominated primarily by US technology names. Businesses operating within the worlds of commodities, technology and biotechnology have been among the biggest winners.
Fresnillo, a Mexican precious metals company listed on the FTSE 100 index, has seen its share price soar more than 300% in the 12 months to 1 December 2025.
Such returns can be seductive, but too much exposure to growth stocks is risky. Their valuations are often based on optimistic expectations, meaning share prices can be hit if they fail to deliver. Growth stocks may also experience increased volatility because they are concentrated in a handful of sectors. This can make them vulnerable to negative sector-wide news.
