A decade ago, the UK voted to leave the European Union, kicking off the event known as Brexit, the consequences of which investors have debated ever since.
Helen Mehta, chief economist at St. James’s Place, said: “10 years on from the Brexit referendum, the UK economy has not suffered the cliff-edge shock many feared.
UK equities still face structural challenges, she noted, but they are attractive from a valuation perspective and offer some notable diversification and defensive benefits.
Indeed, from a stockmarket perspective, things have done moderately well over the past decade. The FTSE All Share broke an all-time high of 10,000 points earlier this year, despite Brexit being followed by pandemics, global conflicts and a rotating wheel of prime ministers.
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Since the pandemic, the FTSE All Share is up 130.4%, lower than counterparts such as the US, but still an absolute positive.
“But nor has Brexit been cost-free,” Mehta said. “Its impact has been slower burning, less visible in any single year, but meaningful when viewed through the lens of investment, productivity, trade and labour supply.”
Since the vote, the UK has faced persistent outflows and a downtrodden sentiment, demonstrated by data from the Investment Association (IA)
According to IA data taken in June 2016, the IA UK All Companies sector was the largest in the funds universe at £155.3bn, with IA Global in second at £88.8bn. 10 years on in April 2026, the AUM of the UK All Companies sector has slid to £147.1bn, while the Global peer group has swelled to more than £247bn.
On top of this, since 2016, the IA UK All Companies sector has been the worst-selling peer group among retail investors, according to the IA. That said, even before the Brexit vote, the sector seemed to struggle and was the worst-performing IA sector in 2015, 2014, 2012, 2011 and 2010, according to June 2016’s data.
Chris Smith, Jupiter UK Growth equities manager, added: “Beneath the surface, however, the UK stockmarket still bears the scars of a decision that has weighed on both business and investor confidence.”
The strong UK performance has been due to the FTSE 100, which is up 138.4% since the Brexit vote, while the mid-cap FTSE 250 is up just 78%.
“Sterling weakness, FX-led inflation and a higher cost of capital have all contributed to a more challenging backdrop for UK-focused businesses,” Smith noted. Small and mid caps are generally considered more domestically linked than their larger peers in the FTSE 100, which have almost 70% of their revenue internationally.
The average IA UK Smaller Companies fund is up 75% over the past decade, underperforming both the FTSE 250 and the Deutsche Numis Smaller Companies index. It also came in behind the average IA UK All Companies and UK Equity Income sectors, where managers can take higher exposure to larger companies.
However, we see the opposite trend borne out in the closed-ended investment trust space. Here, the IT UK Smaller Companies sector triumphed, with 109.9% average return, compared with 101.3% on UK Equity Income Trusts and IT UK All Companies at 91.8%.
Simon Gergel, lead portfolio manager on The Merchants Trust, added: “Since the Brexit vote we have seen a succession of events causing extreme sector rotation, including the Jeremy Corbyn/Boris Johnson general election, the Covid 19 pandemic and the wars in Ukraine and Iran.
“These have led investors to re-evaluate the attractions of certain groups of companies against others, leading to periods of significant polarisation within the stockmarket.”
This trend of weak sentiment has left the UK market trading at a material discount, despite “broadly resilient fundamentals,” according to Dominic Young, lead manager of the CT UK Capital and Income investment trust.
Active managers who were able to take advantage of this discount to buy compelling, cheaply valued opportunities have produced some genuinely impressive returns.
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Below is a list of the top 20 UK funds and trusts since the Brexit vote, sorted by total return.
Notably, the balance was roughly tilted in favour of open-ended funds, with 13 OEIC’s beating both the FTSE All Share and the FTSE 100.
Topping the chart was Richard Staveley’s Rockwood Strategic fund, a high-conviction UK smaller companies trust, which surged 340% over this period.
Coming in a comfortable second place was the Law Debenture Investment Trust, led by James Henderson at 261.5%, outpacing the FTSE 100 by almost 130 percentage points. On a recent AIC webinar, he noted: “I have been hiding a bit in large companies for several years, because of the problems in the UK Smaller Companies’ sector, because of this lack of investment [since Brexit].”
The vote led to massive investor uncertainty, he explained, and made it difficult to convince investors to continue holding his trust, or indeed UK smaller companies, he added.
The rest of the top five of the table is populated by Artemis SmartGARP UK Equity, Artemis UK Select and JPM UK Equity Plus.
Gergel’s Merchants Trust also made the cut at number 18 on the list, with a total return of 157.9%, placing it ahead of the FTSE All Share during this period.
He said: “We have not changed our investment approach, but we have been able to take advantage of anomalies where we have seen share prices diverge from long-term fundamental or intrinsic value.”
See also: The UK: A decade from the referendum
