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Contrarian Fund Picks for 2026

Looking at the Morningstar Categories with large outflows for some potential future winners among European funds.

Key Takeaways

  • Global large-cap growth funds saw the biggest outflows in 2025 among Morningstar categories.
  • Instead European fund investors poured money into the global, Europe and US large-blend funds.
  • The long-term track record of “unloved” funds is significantly better than “loved” funds.

Buying the funds everyone else is selling can be a winning strategy.

Overall, Europe-domiciled equity funds and ETFs attracted EUR 186.6 billion of net new money in 2025, but not all categories saw inflows.

Fund inflows tend to attract additional inflows, while outflows trigger more redemptions, resulting in a self-reinforcing trend. Eventually though, popular funds become too expensive and unpopular ones too cheap, and the process reverses. Therefore, the combination of strong inflows and high past returns can be a good indicator of a investment’s overvaluation.

How to capture this dynamic brings the “Buy the Unloved” strategy into play.

Should Investors Buy Unloved Funds?

For more than 30 years, between 1994 and 2024, Morningstar has published its Buy the Unloved study, which looks at the Morningstar categories that suffered the most outflows in the previous year, or the unloved, while avoiding the groups that received the highest inflows. The approach points investors to cheap or out-of-favor parts of the market that may be due for a rebound, using fund flows as a guide.

This involves investing equal sums in one fund from each of the three long-only equity Morningstar categories with the largest calendar-year outflows, while avoiding those with the heaviest inflows. After three years, the stakes are sold and the proceeds invested evenly in that year’s unloved categories. Like every other contrarian strategy, this is best suited for the periphery of average investors’ portfolio.

The results have been striking: USD 10,000 invested on 1 January 1994 in the unloved portfolio would have become USD 282,771 on Nov. 30, 2024, the most recent study’s end date. The same amount invested in the “loved” portfolio, on the other hand, would have been worth only USD 66,321 at the end of the period, less than the USD 104,483 that the same investment in an international large-cap blend equity fund would have returned. In this case, the result corresponds to the category average.

Global Stock Markets Outperformed in 2025

US equities posted another year of strong returns last year, despite faltering employment data and tariff-driven volatility. The Morningstar US Market TME Index gained 17.8% in 2025 in dollars, its third straight year of double-digit gains.

However, while the US market performed well, it underperformed many global markets. Major Asian equity markets rose more than 30% in 2025, the Morningstar Developed Europe TME Index gained 36.7% in euros, and the Emerging Markets Americas Index surged 53.2% in US dollars. Weakness in the US dollar, driven by tariff and trade uncertainty, partly explains this outperformance, as well as a reallocation by international investors away from US assets amid geopolitical realignment under the Trump administration.

In this context, Europe-domiciled fund investors poured money into the global, Europe and US large-blend Morningstar equity categories, mostly through passively managed funds, as well as into global emerging-markets equity funds. At the same time, they have made large redemptions from global, Europe and US large-cap growth equity funds, as well as from strategies exposed to ecology, and UK stocks.

Unloved funds can be unloved for a reason: A period of underperformance, an unfavorable investment strategy, or industry challenges, can all give investors legitimate grounds for caution. Still, taking a contrarian approach to fund selection can also produce great results.

Top-Rated Funds in Unloved Categories

European investors’ most unloved equity categories included global, European and US large-cap growth stocks, thematic strategies exposed to ecology, as well as UK equity.

Despite this, a few funds stand to prove their qualities if markets are favorable to their categories. Here are some funds in unloved areas, which hold a Morningstar Medalist Rating of Silver or Gold.

Global Large-Cap Growth Equity

T. Rowe Price Funds SICAV—Global Growth Equity Fund

The actively managed T. Rowe Price Funds SICAV—Global Growth Equity Fund lost 0.02% over the past year, falling less than the average fund in the global large-cap growth equity category, which fell 1.79%. The fund placed in the 36th percentile for performance and lagged its benchmark, the Morningstar Global Growth Target Market Exposure Index, by 3.6 percentage points. The EUR 343.4 million fund has gained 14.47% over the past three years, while the average fund in its category is up 11.4%.

Capital Group New Perspective Fund (LUX)

The EUR 17.3 billion Capital Group New Perspective Fund (LUX) rose 3.65% over the past year. The gain beat the 1.79% loss on the average fund in the global large-cap growth equity category, leaving it in the 21st percentile for performance. The fund performed roughly in line with its benchmark. Over the past three years, the Capital Group fund rose 14.82%, while the average fund in its category rose 11.4%.

Sector Equity Ecology

Robeco Circular Economy

The EUR 538.2 million Robeco Circular Economy was launched in July 2025. Over the past three months, the actively managed Robeco Circular Economy fell 2.09%, while the average equity ecology fund gained 1.96%. The fund placed in the 88th percentile for performance and lagged its benchmark, the Morningstar Global Target Market Exposure Index, by 3.05 percentage points. The EUR 538.2 million fund has climbed 1.03% year to date, underperforming the average fund in its category, which rose 3.34%.

UBS Common Contractual Fund—Global Climate Transition UCITS

The passively managed UBS Global Climate Transition UCITS gained 5.86% over the past year, underperforming the average fund in the equity ecology category, which rose 6.65%. The fund placed in the 46th percentile for performance and lagged its benchmark by 0.64 percentage points. The EUR 382.6 million fund has gained 15.44% over the past three years, while the average fund in its category is up 6.11%.

UK Large-Cap Equity

TT UK Equity Fund

The EUR 51.3 million TT UK Equity Fund rose 20.67% over the past year. The gain on the fund beat the 13.27% gain on the average fund in the UK large-cap equity category, leaving it in the eighth percentile for performance. The fund beat its benchmark, the Morningstar UK All Cap Target Market Exposure Index, by 3.27 percentage points. Over the past three years, the TT International fund rose 13.03%, while the average fund in its category rose 12.35%.

JPMorgan UK Equity Core Active UCITS ETF JUKC

Over the past year, the actively managed JPMorgan UK Equity Core Active UCITS ETF rose 18.76%, while the average UK large-cap equity fund gained 13.27%. The fund placed in the 12.0th percentile for performance and beat its benchmark by 1.36 percentage points. The EUR 523.3 million fund has climbed 14.22% over the past three years, outperforming the average fund in its category, which rose 12.35%.

Europe Large-Cap Growth Equity

Fidelity Funds — European Dynamic Growth Fund

The EUR 1.2 billion Fidelity European Dynamic Growth Fund fell 11.26% over the past year. The loss on the actively managed fund was worse than the 1.68% loss on the average fund in the Europe large-cap growth equity category, leaving it in the 82.0nd percentile for performance. The fund lagged its benchmark, the Morningstar Developed Europe Growth Target Market Exposure Index, by 17.8 percentage points. Over the past three years, the Fidelity International fund rose 1.45%, while the average fund in its category rose 5.76%.

Comgest Growth Europe

The Comgest Growth Europe lost 14.11% over the past year, falling further than the average fund in the Europe large-cap growth equity category, which fell 1.68%. The fund placed in the 91.0st percentile for performance and lagged its benchmark by 20.65 percentage points. The EUR 2.9 billion fund has gained 1.98% over the past three years, while the average fund in its category is up 5.76%.

US Large-Cap Growth Equity

Amundi Russell 1000 Growth UCITS ETF MWOT

The EUR 552.9 million Amundi Russell 1000 Growth UCITS ETF fell 0.25% over the past year. The loss on the passively managed fund edged out the 3.21% loss on the average fund in the US large-cap growth equity category, leaving it in the 35.0th percentile for performance. The fund fell further than its benchmark, the Morningstar US Large-Mid Cap Broad Growth Index, by 0.09 percentage points. Over the past three years, the Amundi fund rose 22.83%, while the average fund in its category rose 17.15%.

Natixis International Funds (Lux) I — Loomis Sayles U.S. Growth Equity Fund

Over the past year, the Natixis International Funds (Lux) I — Loomis Sayles US Growth Equity Fund fell 5.17%, while the average US large-cap growth equity fund lost 3.21%. The fund placed in the 63rd percentile for performance and fell further than its benchmark by 5.01 percentage points. The EUR 4.9 billion fund has climbed 22.57% over the past three years, outperforming the average fund in its category, which rose 17.15%.

Methodology for Buy the Unloved Funds Strategy

The 10 most unloved Morningstar equity categories in Europe last year are matched with valuations. The performance of the Morningstar index for each category is calculated using the market-weighted price/fair value of its constituents, using Morningstar analysts’ estimates when available and a quantitative process in the other cases.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.

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