While investment commentators debate the pros and cons of active fund management as opposed to passive funds, data from Standard & Poor’s shows that some funds have sharply outperformed the equity market so far this year.

A total of 165 domestic US equity mutual funds ranked by S&P rose by 47 per cent or more since the start of the year through to the end of October, the rating agency said, more than doubling the 23.6 per cent rise in the S&P 500 benchmark of stocks year-to-date through 27 November.

There remains debate in the industry, however, whether the additional fees a client pays to actively managed funds are justified by results, because over time, not all funds will logically be able to beat a market and that past performance does not guarantee future results. Assuming markets are broadly efficient and prices discount expected information about company performance, advocates of cheaper, passive funds say they offer better value over the long term.

Some of the fund results noted by S&P, however, are certainly eye-catching. Among some stand-outs is the Pin Oak Aggressive Stock, which was up 63 per cent through October and 69 per cent through 27 November. Another fund, called the

Hotchkis & Wiley Mid-Cap Value Fund, has gained by 45 per cent through October and 50 per cent year to date through 27 November, outperforming its mid-cap value peer group. The Legg Mason Capital Management Opportunities Trust, was up by 71 per cent in the year to 27 November.  Even more spectacularly, the Fidelity Select Automotive Portfolio, has gone up by 108 per cent this year.

”Investors might have missed out on some of the gains achieved by equity mutual funds during 2009, but there's no reason to panic,” said Todd Rosenbluth, an S&P equity analyst.

“Before making a selection, make sure to look at not just the gains the fund may have achieved this year, but also aim to understand the fundamentals of its performance, risk and cost factors using the S&P mutual fund ranking methodology. This year's top funds could repeat their success in 2010 or be next year's bottom funds, as the well-known disclaimer about past performance warns.”