General equity remains an important category, even though the majority of new money has gone into the one-stop multi-asset funds, mainly in the high equity and low equity categories. It is an easy default to buy one of the popular equity funds such as Allan Gray, Investec and Coronation. They have been highly successful in spite of their size. The market has been narrow, with a few large caps, such as Naspers, carrying the rest. But the next few years might be quite different. Research by Nobel laureates such as Kenneth French and Eugene Fama show that small caps outperform over time. It is hard for the lumbering dinosaur funds to add value by investing anywhere outside the top 40 or to switch nimbly between styles such as value and momentum. This month we look at five distinct high-quality funds. They should all be on the radar of multimanagers and top financial advisers. The outlier is Discovery Equity, which is managed by Investec Asset Management. But it has less than R2bn under...

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