It has been possible to make money from equities this year. Five markets in the FTSE World index have produced returns of more than 20 per cent. Alas, since the five concerned have been Egypt, Colombia, Hungary, the Czech Republic and Austria, it is unlikely that many investors gave them a very heavy weighting.

Of the major markets, the best performer has been Japan, with a 6 per cent rise in dollar terms; the worst Germany with minus 7.7 per cent. The US, UK and French markets have been broadly flat, as has the FTSE World index. Those who have bet on the long-term economic potential of India and China have also been disappointed; each market has recorded a double digit loss.

A more likely route to outperformance has come from sectoral bets. The big bet has been on oil and gas, which has returned more than 11 per cent; an impressive return, although still lagging well behind the increase in the crude price itself. Investors clearly feel the current spike will only have a temporary effect on oil company profits. A further boost to performance could have come from avoiding technology stocks, particularly hardware which has dropped more than 16 per cent. Of the largest ten sectors, it has paid to avoid media, pharmaceuticals, telecoms, all of which have shown negative returns. The largest sector of all, banks, with a weighting of more than 14 per cent in the FTSE World index, earned a return of just over 2 per cent.

Apart from oil, the most successful sectors have been a motley crew; real estate, aerospace defence, leisure and construction. It is hard to think of a economic strategy that would have envisioned all those sectors outperforming and, in any case, they have a collective weight of just 5.4 per cent of the index.

So this has not been a market where country or sector allocation is likely to have boosted fund manager performance by much. The saving grace for the fund management community, however, has been the outperformance of the smallcaps. This has been pretty marginal in the US but there has been clear blue water between the MDAX and the DAX in Germany, the FTSE 250 and the FTSE 100 in the UK and the Tokyo smallcap index and the Nikkei 225 in Japan.

Since active managers tend to be overweight smallcaps, this gives them a fighting chance of beating their benchmarks.

Get alerts on Markets when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.

Comments have not been enabled for this article.

Follow the topics in this article