Smaller companies have mounted a sustained fightback from their 'Brexit' lows, helping fund managers focused on UK companies outside the FTSE 100 regain some ground over the last month.
Performance data for all UK-based funds shine a light on the recovery for UK small and 'mid-cap' managers over the last month.
Marlborough UK Micro Cap Growth was the fourth best performing fund in the country over the period, beaten only by a trio of Japan funds. Its 14.9% return over the month to yesterday helped the fund return into positive territory for 2016.
The £535 million fund, managed by Citywire AA-rated veteran small companies investor Giles Hargreave, has a strong long-term track record, with a 126% return over five years that places it right towards the top of the UK All Companies sector.
Hargreave has managed to cling on in what has proved a difficult year for small company investing, given the impact of the 'Brexit' vote, with a 4.9% return over the year to date.
It's been a similar story for other managers focused on small companies over the last month. Of the 20 best performing funds over the period, half have a small or mid cap focus.
They include some of the worst performers over the year so far: funds like JPM UK Smaller Companies, which despite rallying 12.7% over the last month has lost investors 8.1% in 2016.
Or Standard Life UK Opportunities, whose manager Abby Glennie has endured a difficult start since taking over at the beginning of the year. A 13.3% rally over the last month still leaves investors nursing a 6.1% loss for the year.
Smaller companies funds were hit particularly badly by the UK's shock vote to leave the European Union. As investors fretted over the impact on the UK economy over an exit, it was the smaller and medium-sized companies of the FTSE 250 and Small Cap index that bore the brunt of the sell-off.
Unlike the internationally-focused stocks that make up the FTSE 100, handed a boost by the fall in the pound, investors were worried that more domestic smaller companies would suffer the most from a slowdown in the UK economy.
Although the smaller company rally from the 'Brexit' lows suggests the initial sell-off may have been overdone, the signs from the UK economy suggest the problem has not gone away.
The purchasing managers' index for the services, manufacturing and construction sectors, which measures the economic health of businesses, fell to its lowest level since the financial crisis last month.
And the Bank of England expects growth will slow to just 0.8% next year, as it cuts interest rates and launches another round of bond-buying in order to prop up the UK economy.
Gervais Williams, Citywire AA-rated manager of the Miton UK Smaller Companies fund, which rallied 9.7% this month but remains 4% down over the year to date, believes the 'Brexit' vote will continue to shake up the smaller companies market.
'A step back in UK growth during the EU negotiations, and the devaluation of sterling, will change the mix of those that are likely to outperform the most in the current market turmoil,' he said.
Williams is confident in the make-up of his fund, with little invested in UK consumer stocks and a large chunk devoted to companies with 'major sales and profits overseas'.
It's a point worth bearing in mind when assessing UK smaller companies funds. While small and 'mid cap' companies may not boast quite the international focus of the blue-chips, which derive around three quarters of their revenues from overseas, they are not simply a play on the UK economy.
As Citywire A-rated Mark Martin, manager of the Neptune UK Mid Cap fund has argued, there are plenty of stocks with strong overseas earnings in the FTSE 250 that is his hunting ground, with around half of revenues coming from abroad.
If you believe the more bearish views of the UK's prospects following the EU referendum, those could be the smaller companies stocks that begin to lead the way.
Citywire AAA-rated Terry Smith is enjoying a remarkable purple patch, even by his own standards. Yesterday brought news that the Fundsmith Equity manager scooped £1 billion in net assets in the second quarter of the year, according to the Pridham Report, more than double that of his nearest rival.
And it's not hard to see why. Over the last 12 months, his fund has returned 36%, taking his five-year return to 192.8%, a record bettered by only two other, much more specialist, UK-based funds, AXA Framlington Biotech and Legg Mason Japan Equity.
Smith's investment approach, of buying a select number of high quality businesses that can sustain a high return on operating capital employed, and holding these stocks for a long time, appears to be able to withstand anything the market can throw at it.
While smaller companies fund managers have enjoyed some recovery from the 'Brexit' vote, UK property, another sector hit hard by the referendum result, is still languishing.
The M&G Property Portfolio, Aberdeen UK Property and Standard Life Investors UK Real Estate funds all consolidated their places as among the worst performing funds of the year, with most drifting into double-digit losses for 2016.
The M&G and Standard Life funds remain suspended to redemptions, after the 'Brexit' vote sparked a dash for the exit among investors.
Mind you, they are still not the absolute worst performing funds of the year so far. Two 'absolute return' funds - ironically, those which target a positive return in any market environment - find themselves at the bottom of the table.
FP Argonaut Absolute Return has lost investors 22% this year, including a 8.6% drop in the month of the referendum result. 'Brexit has changed everything and our failure to anticipate it cost the fund a significant monthly drawdown', said manager Barry Norris in his June update to investors.
City Financial Absolute Equity has meanwhile lost 19%, including a 12.7% loss in June, as manager David Crawford's 'shorts' on Randgold Resources (RRS) and Fresnillo (FRES), or bets their share prices would fall, came dramatically unstuck as investors flocked to precious metals and sent shares in the gold and silver miners surging. That was compounded by a 'long' position in Royal Bank of Scotland (RBS), hit hard by the 'Brexit' vote.