Concentrated equity mutual funds have steadily outperformed their diversified counterparts over the past decade, according to Standard & Poor's, the ratings agency.

For all categories, with the exception of mid-cap value and mid-cap growth styles, the average 10-year annualised return to the end of March 2003 for concentrated funds was 9.29% compared with 8.31% for non-concentrated funds. Most concentrated funds in each category performed better than the average of all funds in each category, regardless of the concentration.