A fund manager survey by the Association of Investment Companies (AIC) has tipped healthcare to be the best-performing sector in 2025, with 20% of closed-ended fund managers flagging its potential.

Taking a five-year view, 28% of those surveyed said IT presents the most attractive opportunity, followed by energy at 20% of respondents.

The US is expected to continue its run of outperformance, with 28% of fund managers predicting further growth from a stock market that has consistently hit record highs over the year. The UK, which has stabilised following the general election, is also expected to continue its positive run, according to nearly a quarter of managers in the poll.

While Donald Trump’s victory has weighed on emerging markets as they consider the threat of trade tariffs and a strengthening US dollar, 16% of portfolio managers expect the region to be the best performer next year.

Nearly a third believe a smaller company recovery is coming next year. Among them is Jean Roche, manager of the £211m Schroder UK Mid Cap (SCP ) trust who joined Paul Niven of F&C and Carlos Hardenberg at Mobius in tipping stocks for 2025.

ME Group

Formerly known as PhotoMe, ME Group (MEG) stands for ‘making easy’, and the company supplies a range of automated machines.

Roche, lead manager of the Schroder trust, said the company was ‘one of the most interesting companies in the portfolio’.

Best known for a range of photobooths that send pictures straight to the passport office for ‘green light’ approval, it also provides laundry equipment and dog-washing machines.

‘The company even has a YouTube channel recording laundry machines in a Morrison’s carpark,’ said Roche.

‘[ME Group] is an automation story… it is cash rich and has a growing dividend. It operates in the UK and Ireland, Japan and France – a really interesting one is people are asking when these machines are coming to the US.’

Shares in ME Group have risen 80% this year and are up more than 160% over the last five years. You can see Roche discuss it further in the video of our recent virtual event with the fund manager.

Smurfit WestRock

UK-listed Smurfit Westrock (SWR) was better known as Smurfit Kappa until July when it changed its name in the wake of its takeover of US paper and packaging peer WestRock.

The $11.2bn (£8.8bn) merger created one of the world’s largest packaging companies and the best paper-based one in Europe, said Paul Niven, manager of the £5.4bn F&C (FCIT ) trust.

Although Niven is not himself a stock-picker, responsible instead for overseeing the fund managers in charge of the regional portfolios in the UK’s oldest investment trust, he said that one European manager was ‘excited about Smurfit Kappa’.

He explained that the group offers an ‘integrated model producing high market share and [delivered] high returns in 2023’.

The WestRock merger catapulted the group into position as a top three player in the ‘more consolidated market of the US’ but Smurfit’s view on the merger was that it was ‘paying trough earnings and can drive higher returns from the WestRock assets’.

‘The timing of that purchase appears good and it is saying it can get double the synergies it already forecasted and the cycle is improving,’ said Niven.

Chroma

Chroma, a Taiwanese semiconductor testing company, is held by Mobius Capital Partners fund manager Carlos Hardenberg in the £175m Mobius (MMIT ) trust.

Hardenberg is a keen backer of Taiwan, which makes up just over a quarter of the portfolio. For him, Chroma stands out due to the ‘very complex technology [it has created] to test the performance of high-performance systems in the semiconductor arena’.

‘As the world of semiconductors gets more complex and the industry and the products become more complex, they have to deal with more data and more stress testing,’ he said.

‘The testing itself is migrating and evolving rapidly and Chroma is at the forefront of sophisticated testing.’