One of the hardest things about investing is choosing the right funds for your portfolio, or knowing when to ditch certain investments and acquire new ones.

The Money Observer Premier League aims to help investors with these decisions by highlighting the most consistent top-performing fund managers across 11 sectors and monitoring their performance every three months.

Our line-up of star managers is a good starting point if you’re building a stocks and shares ISA portfolio. It’s also handy if you’ve decided you want some exposure to a new sector, for instance the Japanese stockmarket, but don’t know which Japan fund to choose.

One Money Observer reader told us that he had included Premier League funds in his ISA for the past 18 months, switching into new funds whenever the league was updated, and has enjoyed excellent returns, ahead of all benchmarks.

With this in mind, let’s explain how the league works and unveil our new line-up.

We measure funds across three one-year periods. For this update we’re looking at the 12 months to 1 March 2013, the 12 months to 1 March 2012 and the 12 months to 1 March 2011. A fund is only booted out of the league if it falls into the third or fourth quartile of its sector in the most recent year.

We only have one fund to replace in this update: Investec UK Smaller Companies. which has slipped into the third quartile.

Fund manager Philip Rodrigs explains that the lacklustre performance compared to other UK smaller companies funds was mainly due to the fund not holding some companies that have enjoyed sharp rallies.

The prime example was the largest constituent of the FTSE Small Cap Index, Thomas Cook Group (TCG), which was not held by the fund due to a very distressed balance sheet and a poor track record of earnings delivery, he says. The shares rallied 141% in the first three months of 2013 driven by promises by the new management.

To replace the Investec fund we take the top fund in its sector, measured by first-quartile rankings in each of the three years, and then by the biggest three-year return.

Joining the league is Paul Marriage, fund manager of Cazenove UK Smaller Companies. There were no funds in the UK smaller companies sector that actually boasted a perfect trio of first-quartile returns. Instead the Cazenove fund had first-quartile performance in each of the past two years, and second-quartile in the year to 1 March 2011. It has also generated a massive 92.3% over three years, the biggest three-year return of all our Premier League members.

Marriage says the secret of his success is a simple stockpicking approach and sticking to my principles.

The fund holds 71 companies with around a third of the portfolio in the industrials sector. Ignoring sectors such as mining and oil and gas helps us reduce risk, says Marriage. We like to invest in stocks that show ‘P3M’ characteristics — product, market, margin and management — and these types of companies typically account for 60% or more of the portfolio.

Xaar (XAR), a supplier of industrial inkjet printheads, has long been in Marriage’s P3M hall of fame and is the fund’s second-biggest holding. In March he saw probably the strongest results statement from Xaar that I have witnessed in 15 years of following and investing in [the company].

Our resident Share Sleuth, Richard Beddard, also believes the digital printing firm is at a favourable point. For more, read: Xaar’s night on the tiles .

The fund’s biggest holding is media company Perform Group (PER), at 3.6% of the portfolio.

For the full complement of Premier League funds, see Fund Data below.