The FCA has castigated the asset management industry for promoting closet-trackers as actively managed funds. Elsewhere, it shames companies offering investment vehicles which do not deliver the outcomes to investors that their marketing literature promises.

Against this backdrop, investors could be forgiven for shying away from investment funds altogether. However, Square Mile Investment Consulting and Research stresses that there are examples of best-of-breed practice and highlights four funds which do not reference benchmarks, preferring to construct portfolios to meet specific investor objectives.

Within the context of the UK equity income universe Square Mile believes the Evenlode Income fund may offer something different to its peer group. Its rather simple objective is to generate mid to high single digit returns over the long term which includes increasing its dividend distributions by at least the rate of inflation. In order to achieve its aims, the managers operate to a strict set of criteria and analysis resulting in a final portfolio that can and does look markedly different form the UK market.

The Henderson Fixed Interest Monthly Income fund invests across bond markets, with no reference whatsoever to any benchmark. The managers know how important a reliable income stream is for their clients and the focus of the fund is very much on meeting their investors’ income expectations. They target an income yield of about 6%, with income paid monthly and smoothed so that payments throughout the year are roughly equal. This focus on income is an attractive feature for investors who need a degree of confidence in the level and frequency of income payments.

The Premier Multi Asset Distribution fund aims to deliver an attractive and rising income, together with some capital growth, over the longer term. The managers employ a multi-asset, fund of funds approach and will invest across a broad range of asset classes. The fund sits in the IA Mixed Investment 20-60% Shares sector however the manager invests in a fairly unconstrained manner and focuses on selecting the most appropriate mix of assets that aims to grow the level of income as well as being mindful of providing capital growth.

The Veritas Global Focus fund is a global equity strategy with a difference. The investment team focuses their efforts on providing clients with decent returns and they have no immediate concerns about matching those of the wider market or about replicating exposures found in the benchmark. In essence, the fund is invested for absolute returns and over rolling five year time periods the fund aims to achieve returns of global inflation plus 6% per annum and to exceed the returns of the MSCI World Index.

Victoria Hasler, Square Mile's head of research said, "When considering a fund, we put the interests of the end investor at the centre of our research. It is essential that the investment journey that they expect - whether that's to accumulate wealth or preserve it; provide income or protect against inflation - is the journey they believed they were buying into. Those funds which do not deliver what they purport to deliver and charge heavily in the process do the investment industry a great disservice. It is without doubt that we need to take greater responsibility for our financial future and collective investment vehicles should play a central part in helping us meet our investment objectives. The guiding principle of our research is to highlight those funds which help investors meet those objectives."