Small-cap funds may have been the best performing class in the June quarter, but it is clear that the average small-cap manager had been too conservative during what was possibly the strongest rally for junior stocks in decades.

Managers who invest outside the top 100 stocks on our exchange have delivered a return of 20.5 per cent for the period, which is nearly double what their large-cap peers generated but about 6 per cent lower than the S&P/ASX Small Ordinaries Index, according to investment firm Mercer.