QVG Capital has slammed the army of investors hyping up speculative stocks and has told clients it will keep avoiding the frothy part of the sharemarket despite another month of underperforming its benchmark.

The firm’s $858 million Opportunities Fund had been on a tear this year, but portfolio manager Tony Waters warned that its 40 per cent return in the 12 months through September was “unsustainable”. The small-cap fund lagged its benchmark by 1.9 per cent in September and nearly 1 per cent in October.