The multi-manager investment team at BMO Asset Management, which runs more than £4bn across a range of funds, said it has turned to UK funds despite uncertainty clouding the UK market.
Investment manager Scott Spencer said the UK market trades at such a discount to other developed markets that opportunities exist despite the uncertainty.
The managers believe they can add value by choosing the right funds, rather than by making judgements on the outlook for the economy.
They are cautious on the outlook for the US market, believing that the negative impact of interest rate rises has yet to be felt in the economy.
The funds the managers have been buying are those run by managers who are happy to invest in UK domestic shares right now, rather than in international earning companies.
Among them is the £1.1bn Man GLG UK Undervalued Assets fund, a fund managed by Henry Dixon, which returned 48 per cent over the past three years, compared with 28 per cent for the average fund in the IA UK All Companies sector in the same time period.
The fund is ranked fifth from more than 200 funds in the sector over the past three years.
Mr Spencer said: "Henry Dixon’s fund underperformed last year, but we understood the reasons why, so we have been aggressively buying the fund this year, the track record is exceptionally good."
Another fund being bought by BMO is the £900m Majedie UK Focus fund.
Mr Spencer said: "One of the major things we look for when selecting a fund is alignment of interest between us and the fund manager.
"The thing with Majedie is that while it has other funds, the vast bulk of its assets are in the UK funds, so if it doesn’t do well in the UK, it doesn’t really have a business."
Luca Paolini, chief strategist at Pictet Asset Management, said he is generally cautious on the outlook for equities, but he also regards UK shares as "cheap" and "unfairly tainted" by Brexit.
He added: "For sectors, we prefer defensive industries such as health care and utilities, which tend to outperform in periods of slowing economic growth, to economically-sensitive cyclical stocks, such as consumer discretionary and technology – the two most expensive industries in our view."
Research conducted by platform provider Aegon in February showed advisers were deeply split on the outlook for UK equities, with 20 per cent of the 250 advisers spoken to by the platform stating they expect UK equities to be the worst performing asset class for their clients in the year ahead, while 14 per cent expected it to be the best performing.
Nick Dixon, investment director at Aegon, said: "We believe that the most potentially negative scenarios are already reflected in prices for UK equities, and that the prospects for this market are better than the market expects.
"It is unsurprising that advisers and investors have mixed views on the best investment strategy to adopt, but it would be wise to remain focused on diversification and long-term returns when building client investment portfolios."
